According to newspaper reports Russian oil titan Rosneft is courting investment from British oil giant BP in order to avoid an embarrassing flop in its upcoming flotation.
Despite being Russia’s dominant oil company, Rosneft is reportedly struggling to find investors at its current valuation of $80 billion. Therefore, the Russian outfit is looking for a $1 billion investment by BP to encourage other investors, the Independent newspaper in the UK has suggested. A $1 billion investment would represent a 10% portion of Rosneft’s scheduled $10 billion IPO.
Meanwhile, from BP’s point of view, an investment would curry considerable political favor with Moscow, which would potentially aid BP’s joint venture in Russia, TNK-BP.
The two sides have reportedly been in negotiations for several weeks.
Despite the issuing of shares, which are also likely to be taken up by major Chinese and Indian energy firms, the Russian government will maintain its majority grip on Rosneft. To this end, investors will not be permitted to buy more than 2% of the oil outfit during the IPO.