RUSSIA is the new El Dorado. Oligarch capitalism is giving way to global investment and leaving some very cash-rich people behind.<\/p>\n
Here in Britain, Roman Abramovich has become a national name overnight because of his high-profile purchase of Chelsea FC.<\/p>\n
The Russian entrepreneur, described by Moscow investment banker United Financial Group as the ‘world’s richest man under 40’ is busy liquidating his holdings.<\/p>\n
Two deals have just been finalised. The first is the completion of the sale of his oil group Sibneft to Yukos for $15bn. Only a small 7pc stake remains in minority hands (see details on Page 85).<\/p>\n
Based on his holding in Sibneft, Abramovich stands to net a cool $7bn from the transaction. With this amount of cash he could buy the freehold of the whole Fulham Road.<\/p>\n
By design or coincidence, he has also just sold his 25pc stake in RusAl for a further $2bn. An announcement is expected shortly that he has sold his holding in Plantata, a Russian retail and consumer goods firm.<\/p>\n
No one knows exactly why Abramovich is cashing out so rapidly, but it is assumed that the governor of Chukotka province (close to Alaska) has recognised that in the Putin era it is wise to hedge your bets.<\/p>\n
Selling is one thing and cashing out is another. But investment bankers note that Abramovich already holds most of his shares in offshore financial centres, so he will have no difficulty moving his cash out of Russia.<\/p>\n
The coming together of Yukos and Sibneft also creates an opportunity for inward investors. Ever since BP put a foot into the Russian waters by investing $2.6bn in TNK, Russia’s fourth-largest oil company, there has been a scramble among the Western oil majors to buy into the country’s natural resources.<\/p>\n
Exxon has been seeking a deal for months. So it is not in the least surprising that it is now being touted as a minority holder in Yukos, once the Sibneft deal is cleared.<\/p>\n
Exxon has already shown an interest in the world’s secondlargest oil exporting nation by taking a big stake in the Sakhalin oil fields.<\/p>\n
Why the present oil rush?<\/p>\n
Despite the war in Iraq, intended to make the Gulf more secure, there are still strategic worries about Middle Eastern oil supplies, especially from Saudi Arabia where the Americans have been running down their presence post 9\/11 and the strong Riyadh connection to Al Qaeda.<\/p>\n
The Western oil producers also believe that there are enormous growth and development opportunities in Russian oil.<\/p>\n
The infrastructure of the Russian fields is elderly and decrepit and modern drilling techniques have yet to make an impact.<\/p>\n
So harnessing Russian natural resource assets is a great prize, especially now President Putin has brought an element of political stability (some might say too much) to the region.<\/p>\n
Stronger oil prices and the demand for Russian assets have driven share prices in Moscow to record highs in the past week.<\/p>\n
Of course, we have been here before, in 1997-98 when the rouble collapsed and Russian bonds were barely worth the paper they were written on.<\/p>\n
BP, Exxon et al must be aware of these dangers. But for the moment, Russian oil looks distinctly more attractive than that in Iraq.<\/p>\n
Barclays bounce<\/p>\n
THERE has been extraordinary activity in Barclays shares this week.<\/p>\n
On a couple of days the turnover exceeded 70m shares, more than twice the normal amount, and the price has been driven up 5pc to 505p.<\/p>\n
The sharp move inevitably raised speculation that chief executive Matt Barrett is seeking to pull off one final deal before he sails into the sunset.<\/p>\n
Speculation has focused on a merger with Bank of America, which lacks international presence, or Citibank which has plenty of presence overseas, but lacks a retail banking operation in Europe on the scale of Barclays.<\/p>\n
Both deals look intriguing on paper, but the history of major transatlantic banking deals is not that reassuring and there has been no indication from Barclays that one is imminent.<\/p>\n
Another live issue is the succession to Barrett.<\/p>\n
It is a compliment to him that there are as many as three insiders slogging it out for the post, including finance director John Varley (whose spouse is a scion of the founding Pease clan), Bob Diamond, architect of Barclays Capital, and Dave Roberts, the younger head of retail banking.<\/p>\n
All are capable managers. But hedge funds, which have been piling into Barclays shares, clearly believe that Barrett or his successor is plotting a transforming deal.<\/p>\n","protected":false},"excerpt":{"rendered":"
RUSSIA is the new El Dorado. Oligarch capitalism is giving way to global investment and leaving some very cash-rich people behind. Here in Britain, Roman Abramovich has become a national name overnight because of his high-profile purchase of Chelsea FC. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1282","post","type-post","status-publish","format-standard","hentry","category-hedgeco-news"],"_links":{"self":[{"href":"https:\/\/www.hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/1282","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.hedgeco.net\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=1282"}],"version-history":[{"count":0,"href":"https:\/\/www.hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/1282\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=1282"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=1282"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=1282"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}