Banks want transparency
The deal to sell 19.5% of shares of Rosneft"to a consortium of Glencore and Qatar QIA continues to raise questionsЖ this time from the banks with which the Italian Intesa wants to share the credit for €5,2 billion, issued to the buyers of the package. As reported by GlobalCapital, specializing in capital markets, the bankers require clarity regarding the ownership structure of the privatized shares in Rosneft and refuse to participate in syndication until they receive all the information about the transaction and its final beneficiaries.
Intesa Group in early January entered into a loan agreement with the consortium Qatar Holding - Glencore, providing it with €5,2 billion for the purchase of Rosneft shares. The bank representative then informed that Intesa would attract other banks to share the credit with them. €5,2 billion is 1.4% of Intesa's loan portfolio at the end of 2016, but almost 15% of the bank's current market capitalization.
European credit market banks are preparing that Intesa will invite them to participate in the syndicate, but at the moment, "they know about the structure of ownership [of shares of Rosneft] or structure of the financing of the transaction no more than can be judged by the scarce and uncertain information which is presented in official statements and media reports," writes GlobalCapital. Five sources in a variety of major banks said that they would not participate in the syndication loan until identify the beneficial owners of the privatized Rosneft shares that belong to the chain of SPV-company (special purpose company), registered in Singapore, the United Kingdom and the Cayman Islands. Representatives of the banks are the largest participants in the European syndicated loan market (HSBC, Barclays, Societe Generale, BNP Paribas, Credit Agricole, ING Groep, UniCredit) declined to comment on possible participation in syndication with Intesa or didn't respond to requests of RBC.
The principle of "know your customer" (KYC), which is followed by international banks, will not allow many banks to participate in the syndicate if Intesa does not provide complete information, according to GlobalCapital. KYC requirements for the syndicate are common practice, and for large public companies templates from one contract to another are duplicated, as confirmed a banker specializing in syndicated deals in the Russian market. Intesa itself, providing a credit, had to check the final beneficiaries of QHG entities in accordance with the "know your customer" rules, mentioned earlier Reuters.
The secret in the Caymans
Glencore in a press release dated December 10, on the participation in the privatization of Rosneft reported that 19.5% of shares of Rosneft were acquired by a consortium of Glencore and QIA, created on a parity basis. Accordingly, while Glencore made a deal to only €300 million of its own funds (2.9% of the total value of the transaction), it owed half of the purchased package (9.75% from 19.5%) and the same share in the net profit of Rosneft available for distribution to shareholders, as followed from the press release.
But from the public information about the companies-buyers one cannot deduce the parity of ownership of Qatar and Glencore shares in Rosneft. As previously wrote RBC, the direct holder of 19.5% of shares of Rosneft became a Singaporean QHG Shares Pte, which is wholly owned by the British QHG Investment. That, in turn, is controlled by the Qatar Foundation and British QHG Holding. And the latter in the documents of the Singapore corporate registry listed as a "parent company" of the consortium, but with three participants: in addition to Glencore and QIA, an offshore QHG Cayman Limited, registered in the Cayman Islands.
In contrast to the UK, the information about the founders and owners of the companies in the Cayman Islands is not subject to public disclosure. Using the entitiy in that jurisdiction may reflect the fact that the Cayman Islands is a "neutral ground in a stable legal system" that provides certain tax advantages, but it is also a jurisdiction that provides maximum privacy beneficial owners, writes the local edition Cayman Compass.
RBC Two sources close to the participants in the transaction for the sale of 19.5% of shares of "Rosneft", insist that the emergence of the offshore company from the Cayman Islands in the ownership structure was of a "technical" nature. First, a source close to the consortium of buyers, said QHG Cayman - a kind of "provider", a service company, which was necessary, so that the deal could "go" Qatar (Qatar Holding formally joined the transaction later, in late December). But this structure will remain as long as there is a partnership, recognized interlocutor RBC. "It is important that it is not controlled by any one of the investors - he said - but its role - to be a member and to vote together with the other (Glencore and Qatar Holding)». RBC Another interviewee confirmed that Glencore and QIA - the only beneficiaries of the 19.5% of shares of "Rosneft", there is no other.
Press Secretary of "Rosneft" Mikhail Leontiev declined to comment on the question of beneficiaries RBC QHG Cayman. Press Service of Intesa did not respond to a request to RBC. Earlier the question to Reuters, Intesa know whether beneficiaries QHG Cayman, the bank replied that he does not comment on the details of customer transactions, but assured that "the funding has been made in strict compliance with rules and regulations."
What Intesa seeks banks for syndication loan after she gave him, an atypical situation. It is the practice of recent years, the club nature of the transaction occur without underwriting syndicate members are seen immediately, said the banker, specializing in syndicated transactions. According to him, the deal when the underwriter (in the case of the privatization of 19.5% of "Rosneft» - Intesa) first takes all the risks, and then looks for the participants of the syndicate - a rarity. In this case, as a rule, the underwriter has up to three months to search for other lenders, at least - up to six months, the source said RBC.
Another source in the banking circles told RBC that Intesa actually "sells risk that has taken on more than you need." Intesa dictate conditions can not, as potential members of the syndicate are aware that it needs to offload risk, and will wait for better conditions of the transaction, RBC said earlier, Professor of Finance, University of Houston, Craig Pirrong.
A source close to the consortium of Glencore and QIA, suggests that Intesa syndicate can not collect because of the complicated schemes and guarantees for the loan. "I'm sure that it's not difficult to determine the beneficiaries", - he says, admitting that Intesa may not reveal the whole scheme of such guarantees.
Earlier, RBC reported with reference to the documents QHG Shares in Singapore's registry that Intesa collateral for the loan are all 19.5% of "Rosneft" shares, and rights to dividends on these shares. The loan margin, and Glencore upon to pay substantial pledged as collateral up to € 1,4 billion if the market price of "Rosneft" shares fall to a certain level, but unnamed Russian banks have agreed to shift the risk to the environment, which were not disclosed.
Press Service of Intesa confirmed GlobalCapital, it will invite international banks to take part in the syndicate. «Intesa Sanpaolo considers, together with two investors [Glencore and Qatar] strategy for international syndication", - quotes the edition Representative Intesa.
the bank's press service, as well as representatives of Glencore and QIA have not responded to requests to RBC. Top-manager of the Russian Bank of the top-30 said that theoretically, if the foreign banks refuse to syndication, syndication is quite possible with the participation of banks in Russia. "Usually syndicate made under English law, it is enough of a foreign lender, for example, most of Intesa, and the rest of the creditors may be Russian - such deals are not uncommon," - says the interlocutor of RBC.
In addition to the consent of progarantirovat Glencore € 1,4 billion for the case to reduce the cost of shares of "Rosneft", located in the pledge, unnamed Russian banks have provided the remaining € 2,2 billion for the purchase of 19.5% of shares of "Rosneft" consortium of Glencore and QIA. Members of the credit agreement are bound by confidentiality, RBC says a source close to the consortium.