Bloomberg News

TNK Billionaires to Invest JV Sale Proceeds in Russia

December 26, 2012

The TNK billionaires, who agreed to sell out of their oil venture with BP Plc (BP/) for $28 billion, said they plan to invest most of the proceeds in Russia after President Vladimir Putin said he “hoped” they would.

“Russia was and always will be the basic platform for investment” for the shareholders’ separate business interests, according to a statement yesterday from Mikhail Fridman and German Khan’s Alfa Group, Len Blavatnik’s Access Industries and Viktor Vekselberg’s Renova Group. “In Russia, in particular, they plan to invest most of the proceeds from selling their shares in TNK-BP.”

BP and AAR, which represents the billionaires in the TNK-BP oil venture, are ending a contentious, almost decade-long partnership, each selling its half to OAO Rosneft. (ROSN) The largest deal in Russia ever is set to vault state-run Rosneft, headed by Putin’s former deputy Igor Sechin, past PetroChina Co. to become the world’s biggest publicly traded oil producer by volume.

Alfa, Access and Renova also said they “plan to increase their international presence as global players with a Russian registration.”

‘Civilized’ Measures

Putin, who has backed an initiative to repatriate as much as $1 trillion, said last week that Russia should undertake “careful, civilized” measures to bring back capital from low- tax jurisdictions abroad.

While calling on the TNK billionaires to invest at home, Putin said they won’t be forced.

“If we recognized the lawful, legitimate owners, if they earned their money legally, then it’s their business where they invest,” the president said during a televised news conference on Dec. 20. “I would very much like for them to invest the proceeds or a significant part in Russia’s economy.”

The AAR partners praised measures by Russia’s leaders to attract investment in the country, according to their statement.

TNK-BP Holding (TNBP), the venture’s traded unit, fell 1.1 percent today, extended losses from this year’s peak in March to 48 percent and cutting its value to $27 billion. The unit, which holds most of the venture’s Russian assets, slumped 4.8 percent from Dec. 20 to 21, the biggest two-day drop in two months.

BP is selling its 50 percent of TNK-BP for $17 billion and 12.8 percent of Rosneft, while pledging to buy $4.8 billion of Rosneft stock from the state. The AAR shareholders said they’ll get $28 billion in cash when the deal closes next year.

To contact the reporter on this story: Anatoly Temkin in St. Petersburg at atemkin@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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