Chinese Financing Jitters Likely Holding up Sale of Rosneft’s 14 Percent Stake

Commodity trader Glencore plans to seal a deal to sell a 14% stake in Russia’s Rosneft oil company to the China Energy Company Limited (CEFC) by the end of the first half of 2018, RBC reports.

The Switzerland-based company owns 19.5% of Rosneft, along with the Qatar Investment Authority (QIA) wealth fund.

According to a Glencore report made public on Wednesday, the transaction is now waiting for the regulators’ official greenlight.

To close the deal, the CEFC planned to attract funds from China Development Bank (CDB), according to two RBC sources close to the Chinese bank. One of them noted that various options for bankrolling the deal were on the table. The company planned to either borrow all the money needed to ink the deal ($9 billion) from the CDB or attract private investors.

A source close to CDB told the paper that Chinese officials had advised investors to be cautious about providing loans to the CEFC, which is a private company.

“If the CEFC were a state-owned company, it would get a loan very quickly. However, it is a private fund, which has received a large loan from the CDB, and the authorities advised (investors) to be careful about financing it,” the RBC source said.

Nevertheless, two sources close to the CDB informed the paper that they see no risks that the deal would collapse.
Chances are that the deal’s closure has been delayed because of Chinese partners, says Raiffeisenbank analyst Andrey Polishchuk. Apparently, the CEFC is working to iron out some issues with the Chinese government and regulators, which tightened control over capital outflow last year, the expert said.