Major oil pipeline deals loom, says chairman
Barclays Capital thrives in Russian debt market
October 11, 2005
By Guy Faulconbridge
Moscow - Barclays Capital was expanding in Russia as state companies raised multibillion-dollar loans to finance acquisitions and pipelines, said chairman Hans-Jorg Rudloff.
He said major deals could feature borrowing by Transneft and Gazprom to build oil and gas pipelines.
State oil company Rosneft, Barclays' biggest Russian client, would hold a staggered initial public offering from the start of next year and a bond issue was likely, Rudloff said, valuing Rosneft at $30 billion (R196 billion).
"There are huge projects in the pipeline," he said. "Russia is a very important market for us and we will expand in all areas here."
Barclays Capital, the investment banking arm of British banking group Barclays, has a balance sheet of 560 billion pounds (R6.4 trillion). It is one of the major players in Russia's swiftly growing debt markets as the Kremlin tightens its control over the oil industry and a credit boom drives consumption.
Rudloff said this year was the best for Barclays in Russia.
"There are so many deals in the pipeline you just have no idea ... The biggest ones are the pipelines, Transneft [and] Gazprom," he said.
"Our relationship with Gazprom is just being built. Will we do a transaction one day with Gazprom? I am sure we will." More than half of Barclays' lending this year was to Rosneft, which last year acquired control of Yugansk, the core asset of fallen oil major Yukos, which was auctioned by the state to recover massive back taxes.
Rudloff brushed aside any concerns about threats from Yukos shareholder Group Menatep, which has said Yugansk was stolen.
Barclays arranged a $2 billion loan with ABN Amro and won a mandate with four other banks for a $7.5 billion syndicated loan to Rosneftegaz.
That loan is to finance the Russian government's purchase of a 10.7 percent stake in Gazprom to give the state control of the gas giant, a key precursor to removal of restrictions on foreign ownership of Gazprom shares.
The $7.5 billion loan was "all done", Rudloff said. The money would be disbursed to Rosneftegaz, a state-owned special purpose vehicle, and repaid from proceeds of a Rosneft initial public offering.
He said his close relationship with Sergei Bogdanchikov, the president of Rosneft, had helped him. They met in the early 1990s in the Russian Far East.
When asked if he expected more big Rosneft deals, he said: "It depends on their acquisition policy. Anything can happen but perhaps not right now.
"Bogdanchikov is an oil man - he comes from the field and he knows his business inside out. I would listen to his forecasts."
Dubbed by many the father of the modern eurobond market and feted for his work at Credit Suisse First Boston (CSFB) in the 1980s, Rudloff has long been at the top table of capital markets. He drove CSFB's expansion into Russia after the fall of the Soviet Union and has been chairman of Barclays Capital since 1998.
- Reuters
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