BP is not a new investment for SWFs, especially Middle Eastern sovereign wealth funds. Already the Kuwait Investment Authority is a large holder of the security, including many others. In the past, numerous SWFs have taken small equity positions in BP. Now with the possibility of a takeover from oil rivals and the need to increase their capital base, SWFs may come to the rescue at the right price and structure. BP also has the option of selling assets in its oil producing portfolio as well.
According to the AP, “BP may be looking to sovereign wealth funds in the oil-rich Middle East to fend off takeover bids amid mounting costs from the Gulf of Mexico oil leak disaster, according to reports published Sunday.
The National, an Emirati newspaper, cited unnamed “informed sources” in the region saying that Mideast financial institutions have submitted proposals to BP advisers and are waiting for a response. Among the options being considered are the acquisition of key assets or a direct cash injection to help strengthen the oil giant’s balance sheet, according to the English-language paper.
The paper quoted a person it called an informed source as saying that “BP knows there is potential support from the Middle East.”
The National is owned by the government of Abu Dhabi, one of seven emirates that make up the United Arab Emirates federation. The sheikdom hosts the country’s capital and controls nearly all the OPEC member state’s oil reserves.
BP spokeswoman Sheila Williams in London declined to say whether the company had been approached by investors from the region.
“We don’t comment on financial issues,” she said.”
Source: AP
07. Jul, 2010
