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Mobius Says Rosneft’s Minority Buyout Offer Needs to Be Higher

Templeton Chairman Mark Mobius
Templeton Emerging Markets Group Chairman Mark Mobius said China represents about 20 percent of Templeton’s emerging market assets, while Brazil and India are “much more” than Russia. Photographer: Dario Pignatelli/Bloomberg

Mark Mobius, chairman of Templeton Emerging Markets Group, said OAO Rosneft’s offer to buyout minority shareholders in OAO RN Holding needs to be higher than 67 rubles ($2.07) a share.

Investors including Templeton, Allianz Investments and Prosperity Capital want a higher price from state oil company Rosneft for shares in RN Holding, previously known as TNK-BP Holding. Rosneft acquired RN, which had been TNK-BP’s publicly traded unit, when it paid $55 billion for Russia’s third-largest oil producer earlier this year.

“It certainly needs to be more than 67 rubles,” Mobius, whose group manages $53 billion, said in an e-mail from Greece. “Of course a compromise is eminently possible since no specific price has been put forward other than that.”

Sberbank CIB analysts said Rosneft’s 67-ruble offer, made on Sept. 30, was “disappointing” for investors as they estimated Rosneft paid $3.70 a share, to London-based BP Plc and a group of Russian billionaires as part of the TNK-BP deal.

Shares in RN Holding jumped as much as 18 percent on Sept. 27 after Rosneft Chief Executive Officer Igor Sechin said his company may buy out minority shareholders at a premium. Until then, Sechin had resisted minority investors’ demands, saying at Rosneft’s annual general meeting in April that Rosneft was “not a charity fund.”

Templeton may increase its Russian exposure, which represents 2 percent of emerging-market assets, if corporate governance improves, Mobius said

“A satisfactory outcome of the TNK-BP case would give a very big boost to our confidence and thus encourage us to increase our weighting in Russia,” he said. “With more confidence and better corporate governance it could double, triple or go higher since currently in terms of numbers Russia is one of the cheapest markets in the emerging markets world.”

China represents about 20 percent of Templeton’s emerging market assets, while Brazil and India are “much more” than Russia, he said.

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