CIC Agrees to Nobel Backdoor Listing in Hong Kong

China's sovereign wealth fund has no intention to withdraw from Nobel Oil Group in the face of the Russian firm's listing in Hong Kong.

By staff reporters Wang Duan and Li Qing

(BOCVIP.COM) Sovereign wealth fund China Investment Corp. has tacitly agreed to Nobel Oil Group's plan to pursue a backdoor listing in Hong Kong and has no plans to renege on its commitment to invest in the group, a source close to the deal told Caijing on Oct. 16.

In an Oct. 15 online statement, the Beijing-based fund said it has completed the first phase of its US$300 million investment in the Russian oil company, paying US$100 million for a 45 percent stake and US$50 million to cover operating expenses.

Oriental Patron Financial Group took a 5 percent stake, and the original Russian shareholders retained the remainder.

In the second phase, CIC will provide US$150 million to acquire and develop oil assets with estimated reserves of about 150 million barrels, according to the statement.

In a filing to the Hong Hong Stock Exchange the same day, Kaisun Energy Group Ltd., a coal mining and coking coal processing firm part-owned by Oriental Patron, said it has signed a memorandum of understanding to buy out Nobel Holdings Investments Ltd., which controls Nobel Oil Group's assets.

Chairman Joseph Chan said at a press conference that details of the acquisition, including the price, are yet to be finalized, but that the deal should be completed in January 2010.

The source close to CIC's deal with Nobel Oil Group said that Kaisun Energy will place new shares to the Russian company to kickstart its backdoor listing under a cash for equity arrangement.

Kaisun Energy had total assets of HK$1 billion at the end of March and Nobel Oil Group's assets have been estimated at about HK$4 billion, ensuring the takeover plan constitutes a backdoor listing under terms set by the Hong Kong exchange because the acquisition accounts for more than half the buyer's net assets.

The bourse may force the company to delist if it deems its main business to have changed.

Kaisun Energy was up 6.47 percent at HK$1.48 during early afternoon trading on Oct. 16.

1 yuan = 14 U.S. cents

Full article in Chinese: http://www.bocvip.com/2009-10-16/110284232.html