Hayward bounces back as Vallares float flies

Sarah Arnott
Saturday 18 June 2011 00:00 BST

The former BP boss Tony Hayward put his troubles at the oil giant behind him yesterday, as the successful placing of his Vallares vehicle raised £1.35bn.

Vallares, put together by Mr Hayward along with financier Nat Rothschild and former bankers Julian Metherell and Tom Daniel, will be used as a shell to buy up upstream oil and gas assets in emerging markets.

It placed 133 million ordinary shares at £10 each, with some £100m-worth invested by the four main partners. They will lose some £20m if Vallares makes no acquisitions within two years.

Mr Metherell yesterday described the bookbuilding as a "tremendous validation" of the venture, and a "great endorsement" of its management.

He also stressed that Mr Hayward's involvement had proved no bar to significant investments from the US, despite the former BP executive's ignominious resignation after a series of PR gaffes in the aftermath of last year's fatal Gulf of Mexico oil rig disaster.

Vallares is Mr Hayward's first venture since leaving BP in the autumn.

The company is modelled on the Vallar investment vehicle set up by Mr Rothschild.

Vallar, now valued at around £2.5bn, raised £707m from its listing and used the cash to buy up Indonesian coal groups Bumi and Berau Coal Energy.

With its newly raised £1.35bn of capital, Vallares shareholders can expect its first acquisitions to come "in a reasonably timely way", Mr Metherell said.

The focus will be on upstream oil and gas assets, with production as well as exploration activities, most likely in emerging markets where resource discoveries need an injection of capital and capability to exploit them.

The initial investments will be crucial in shaping the company.

"The direction we go will be decided by that first acquisition," Mr Rothschild said. "If we go to South America, for instance, then we will focus on that geographical area – to create a focused, regional player."

While loath to give too much detail at this stage, the management ruled out investments in "tired, second-hand assets" in the North Sea, in highly transparent markets such as US shale gas, or in politically unstable areas such as Venezuela or central Asia.

While sceptical of highly priced markets such as Brazil, possible opportunities in Russia are very much more on the cards, according to Mr Rothschild. "There are numerous examples of successful investments in Russia," he said. "For all the publicity surrounding TNK-BP, it has been an extraordinarily successful investment for BP shareholders."

Mr Rothschild also yesterday confirmed his ongoing involvement in both Vallares and Vallar, claiming he has no plans for any more ventures because all his time is taken up with these two. "I am inextricably linked [with these projects] and will be for a multi-year period, and two is the maximum I am able to focus on," he said.

George Madison, from Credit Suisse, the bank which managed the Vallares placing, said the shareholder register features a mix of well-known, long-only funds from both sides of the Atlantic, and high-profile hedge funds. In the main, the investments came from the UK and the US east coast, plus a couple of Middle Eastern sovereign wealth funds.

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