Hayward, who spoke to reporters as he left the United Arab Emirates after a 24-hour visit, could be seeking money from sovereign wealth funds after BP incurred billions of dollars in liabilities from the oil spill in the Gulf of Mexico, UBS AG said. The crown prince, Sheikh Mohammed bin Zayed Al Nahyan, is chairman of Mubadala Development Co., an investment arm of the Abu Dhabi Government.
“The option for chasing strategic investors in the Middle East is a sound one,” Saud Masud, the Dubai-based head of Middle East research at UBS AG, said in a Bloomberg Television interview yesterday. “They have significant capital; then they also invest for the long-term.”
Sovereign wealth funds may be interested in buying BP stock after its price dropped by about half since the start of the worst U.S. oil spill. Hayward last month pledged to set aside $20 billion to compensate the spill’s victims and finance the cleanup. To pay for it, the company halted dividend payments and planned to sell $10 billion in assets across the globe.
BP shares rose 16.55 pence, or 4.8 percent, to 362.05 pence in London, the highest close since June 11.
BP Plc would be willing to sell a 10 percent stake in the company to Abu Dhabi, the Wall Street Journal reported, citing an unidentified person with knowledge of the matter.
The Meeting with the crown prince was “very good,” said Hayward as he arrived to board a private jet preparing to depart from Abu Dhabi. “It was a great delight to meet with our long- term partners and friends.”
BP has said it is not looking to issue new equity.
The London-based oil giant would benefit from attracting new capital by easing the pressure for rapid sales, said Rachel Ziemba, a senior analyst who tracks sovereign wealth funds at Nouriel Roubini’s New-York based Roubini Global Economics.
“Raising capital gives more room for maneuver by putting less pressure for asset sales,” she said by phone from London. “Buyers may demand a discount.”
Qatar’s sovereign-wealth fund and Mubadala and the International Petroleum Investment Co. in Abu Dhabi are the most likely to be interested in acquiring a BP stake, Ziemba said.
Abu Dhabi’s sovereign funds hold a combined $500 billion, according to Roubini Global Economics.
Sovereign funds traditionally “have invested in the European and western markets in large cap names, and when you can pick up BP at 50 percent cheaper than its recent highs, then it makes a lot of sense for both parties,” Masud at UBS said.
Spokesmen for the Abu Dhabi Investment Authority and the International Petroleum Investment Co. declined to comment on whether Hayward was scheduled to meet officials there. A spokesman for the Qatar Investment Authority also declined to comment.
Hayward has been touring countries where BP has exploration and production operations. He was in Russia last week and in Azerbaijan yesterday before arriving in Abu Dhabi.
BP produces oil in the sheikhdom, where it is a partner with state-run Abu Dhabi National Oil Co., known as Adnoc, in a venture that dates back to the first oil concession granted in the 1930s in what is now the U.A.E.
A Saudi business team, including energy industry investors, is seeking to acquire between 10 percent and 15 percent of BP’s shares and will hold talks with the company, Al Eqtisadiah reported today, without saying where it got the information.
BP is a “good buy” after the drop in the share price, Shokri Ghanem, Libya’s top oil official, said in a Bloomberg Television interview yesterday. He’s advising Libya’s sovereign wealth fund to take a stake in BP.
The Kuwait Investment Office is in talks with BP about increasing its holding in the company, the Guardian newspaper said on its website on July 4. Kuwait does not plan to increase its stake in BP Plc “for now,” the newspaper Al-Rai said today.
“They are knocking on doors to see who they can get on their side, and countries are looking to see what opportunities there may be,” said PFC Energy Dubai-based analyst Thaddeus Malesa. A quick deal was unlikely as potential buyers would carry out substantial due diligence, he said.