American investor leads new bid for Lukoil’s international business

Billionaire financier Todd Boehly has secured backing from the US government and Gulf investors as he prepares a bid for the international assets of Russian oil producer Lukoil, according to people familiar with the process.

Boehly, who sold his stake in Chelsea Football Club last week, has been working on the potential transaction for months, two people close to the process said. His consortium is seeking to challenge US private equity firm Carlyle, which agreed in January to acquire Lukoil’s international business.

The consortium includes the US International Development Finance Corporation (DFC) and Sheikh Tahnoon bin Zayed al-Nahyan, the brother of the UAE president. 

The DFC, a US government agency that invests in overseas projects, is expected to take a mid-teens equity stake in the new company, according to two people familiar with the matter. The agency is headed by Ben Black, the son of Leon Black, co-founder of private equity firm Apollo.

Boehly’s group has yet to finalise an agreement with Lukoil. People familiar with the matter said the proposal was at an advanced stage, although the extent of any discussions between the consortium and Lukoil remained unclear.

The potential transaction comes about 10 months after Lukoil agreed to sell its extensive international business to Carlyle following the imposition of US sanctions on the Russian company. That transaction has stalled in Washington while awaiting final US approval.

Lukoil’s overseas assets were valued at $20 billion when they were written down in March. The portfolio includes oil and gas fields stretching from Central Asia to Mexico, thousands of filling stations and a major European refining business.

The sale offers a rare opportunity to acquire more than 3 billion barrels of proven and probable reserves, along with some of Bulgaria’s and Romania’s largest refineries.

Boehly’s proposal could put the US government in the unusual position of simultaneously bidding for Lukoil’s assets while another part of the administration determines whether the transaction can proceed.

Other potential buyers that had previously expressed interest in some or all of the assets have since withdrawn, according to one person familiar with the process.

Sheikh Tahnoon’s International Holding Company is expected to lead the consortium alongside UAE-based Allied Investment Partners, according to a person familiar with the discussions.

The Al-Khayyat family would hold a smaller stake, while Boehly and the DFC would control a majority of the board, the person said.

UCC, a company controlled by the Al-Khayyat family, has also recently secured an oilfield concession in Libya that was not awarded through an open tender. The company is also taking a minority stake in a Venezuelan gas field operated by BP.

Separately, Lukoil has agreed to sell its interests in Kazakhstan to the country’s government, subject to approval from the US Treasury. Its stake in the West Qurna oil field has also been transferred to Iraq.

An earlier attempt to acquire Lukoil’s international business by trading company Gunvor was rejected by the US Treasury.

Boehly has built his profile through high-profile investments in sports, minerals and media influencers. The main growth engine of his investment business, however, is a $60 billion life insurer that invests the savings of US retirees.

Kansas-based Security Benefit, one of the largest sellers of annuities in the United States, invests about 40 per cent of its portfolio in assets linked to other parts of Boehly’s business empire.

Boehly’s insurance holdings have nevertheless come under scrutiny amid an investigation into insurers controlled by his longtime business partner and former Chelsea co-owner Mark Walter.

By Tamilla Hasanova