RWE to sell oil and gas unit to L1 Energy

A logo sits on display as a cooling tower emits vapor beside buildings housing a nuclear power plant operated by RWE AG, in Emsland, Germany, on Thursday, Aug. 8, 2013. RWE AG, Germany's largest power generator, fell to its lowest in almost two years in Frankfurt trading as RBC Capital Markets LLC cut its rating on concern profit will slump. Photographer: Krisztian Bocsi/Bloomberg

A logo sits on display as a cooling tower emits vapor beside buildings housing a nuclear power plant operated by RWE AG, in Emsland, Germany, on Thursday, Aug. 8, 2013. RWE AG, Germany's largest power generator, fell to its lowest in almost two years in Frankfurt trading as RBC Capital Markets LLC cut its rating on concern profit will slump. Photographer: Krisztian Bocsi/Bloomberg

Published Mar 18, 2014

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Dusseldorf and Tokyo - L1 Energy, the investment vehicle of Russia’s fourth-richest man, Mikhail Fridman, had agreed to buy RWE’s Dea oil and gas unit, gaining assets in the UK, Germany and the North Sea, the power utility said on Sunday.

The sale valued Dea at about e5.1 billion (R75.7bn), including debt, Germany’s largest power generator said.

The deal is the first for LetterOne, the group set up by Fridman and co-investor German Khan last year to invest part of $14bn they gained from selling a stake in the Moscow-based TNK-BP oil venture.

The agreement helps Fridman and Khan move their energy investment abroad as RWE, which reported last year its first full-year loss since the founding of the Federal Republic of Germany in 1949, looks to raise cash from asset sales.

LetterOne has earmarked as much as $10bn (R107bn) for investment in the oil and gas sector over the next five years and attracted a number of high-profile energy executives to its advisory board, including former BP chief executive John Browne and Anadarko Petroleum’s Jim Hackett.

The transaction still required final approval from RWE’s supervisory board and regulators in several countries, it said.

Dea, which pumps oil and gas in the UK, Germany and Norway, was “no longer” of strategic importance, RWE chief executive Peter Terium said last year.

RWE shares rose as much as 3 percent in Frankfurt trading yesterday, the biggest gain since January.

Germany’s slumping power prices have led to billions of euros in write-downs for RWE, which, like other European utilities, is selling assets to reduce debt.

The sale concludes a quest to sell energy assets that has taken more than two years. An earlier plan to sell Dea assets in Egypt stalled amid the political turmoil that followed the ousting of former president Hosni Mubarak.

Fridman, with a fortune estimated by Bloomberg at $14.5bn, ranking him at 65th globally, pooled more than $29bn of assets in Luxembourg-based LetterOne last year, including his investments in Russian carrier VimpelCom and Turkey’s biggest cellular operator, Turkcell. – Bloomberg

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