Legal bid to block $80bn Rosneft flotation

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Legal moves to block the controversial London flotation of Rosneft began last night as shares in the state-owned Russian oil company were priced close to the top of the range, valuing it at about $80bn (£43bn).

Yukos, a rival oil company which claims the Russian government stole the bulk of its assets and passed them on to Rosneft, lodged a High Court application for permission to proceed with a judicial review to prevent the Financial Services Authority and the London Stock Exchange from giving their approval for the listing.

If the court does not have enough time to conduct the judicial review before Rosneft shares start trading on Wednesday, then Yukos has asked for an injunction to delay the listing while the hearing takes place.

In a separate move, a Dutch court froze $9m of assets in the Netherlands belonging to Rosneft after an appeal by a group of US investors in Yukos who are suing the Russian Federation.

Dealings in Rosneft shares will start on the "grey market" today with the shares due to be priced between $7.50 and $7.60 - close to the top end of the $5.85-to-$7.85 range the company's advisers indicated last month. At that price the offer will value Rosneft at $77bn to $81bn and raise between $10.5bn and $11bn, making it one of the biggest IPOs on the London market. The shares are also being listed in Moscow.

The board of Rosneft was still locked in talks with advisers in the early hours of this morning to settle the final details of the flotation.

About 15 per cent of Rosneft is to be sold off, with three "strategic" investors poised to take about a quarter of the shares on offer.

Britain's BP and Petronas, Malaysia's state-owned oil company, will each buy stakes of about 1.5 per cent costing about $1bn. The stake of China National Petroleum Corp will be slightly smaller.

The three had been expected to take as many as half of the shares on offer.

But a healthy appetite for the flotation among institutional investors outside Russia will see them take about 40 per cent of the shares available, far more than had been forecast.

Russian retail investors will take about 5 per cent, with the remainder going to Russian institutional investors.

It is understood that the issue, which is led by Dresdner Kleinwort and Morgan Stanley, was almost two times covered.