US private equity giant Carlyle Group has begun exploratory discussions with investors in the United Arab Emirates (UAE) to bring in partners if its proposed acquisition of Russian oil major Lukoil’s international assets moves ahead
US private equity giant Carlyle Group has begun exploratory discussions with investors in the United Arab Emirates (UAE) to bring in partners if its proposed acquisition of Russian oil major Lukoil’s international assets moves ahead, Reuters reported on Monday, citing sources familiar with the matter.
Carlyle and Lukoil on Thursday announced a preliminary agreement that would see a wide portfolio of overseas assets including oilfields in Iraq and refineries in eastern Europe transferred to the US firm. The transaction, however, remains subject to approval from US authorities, as Lukoil has been placed under sanctions.
The proposed deal excludes Lukoil’s Kazakh assets. Neither Carlyle nor Lukoil disclosed a valuation, the report said, adding that the parties are yet to agree on a final price. However, the report pegged the portfolio’s value at around $20 billion.
UAE sovereign investors circle deal
The report said state-backed Abu Dhabi investors, Mubadala Investment Company, XRG and International Holding Company (IHC), have held discussions with Carlyle about potentially taking stakes in the Lukoil portfolio, should the US firm complete the acquisition. No agreements have been finalised so far.
The report said UAE investors were particularly interested in Lukoil’s trading arm, Litasco, which plays a key role in the company’s global crude and refined products marketing operations.
It remains unclear at what stage Carlyle may induct partners, if the transaction proceeds. The report said the private equity firm intends to keep the portfolio intact rather than break it up for parts.
Private equity investors in the energy space typically hold assets for around five years before exiting at a profit, either through a strategic sale or public listing.
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