(July 6, 2010) — After BP’s stock dropped by 50% since the start of the Gulf of Mexico disaster, BP reportedly turned to sovereign wealth funds in the Middle East and Asia to guard itself against takeover bids.
The embattled British energy giant is approaching SWFs that include Abu Dhabi, Kuwait, Qatar and Singapore, according to Reuters. The size of any stake sale would be at least $500 million, sources said.
“BP is seeking a strategic partner so it doesn’t get taken over by other major oil companies such as Exxon and Total,” an anonymous source said to Reuters. “It’s BP that is approaching the sovereign wealth funds not the other way around. They are the ones in need of a partner.”
Already, the Government of Singapore Investment Corp. owns an approximately 0.7% stake in BP valued at $122 million. Kuwait’s SWF, the Kuwait Investment Authority, also ranks among BP’s biggest shareholders with a 1.8% stake in the oil giant. The Guardian newspaper reported on July 4 that the Kuwait fund is in talks with BP about increasing its stake in the company.
The oil giant is attracted to SWFs in the region because of their understanding of the oil industry and their unlikeliness to interfere with the operational side of BP’s business, the Guardian reported. SWFs in Kuwait, Abu Dhabi and Qatar in the Middle East would additionally be viewed as “neutral” investors and relationships with these funds would avoid political tensions that would arise from associations with SWFs in other parts of the world.
BP CEO Tony Harward told Bloomberg he was visiting Abu Dhabi for a few days and declined to comment on whether he was approaching SWFs for support.
To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742