Rosneft IPO raises $10.4 bln, court challenge looms

MOSCOW, July 14 (Reuters) Russian oil firm Rosneft said on Friday its IPO, the world's fifth biggest, raised .4 billion, half of it from a handful of buyers including BP, but a UK court challenge from rival YUKOS threatened to delay its market debut.

Russia is keen to make a splash with the share offering as it hosts its first G8 summit this weekend. By sharing Rosneft with the likes of BP Plc, analysts say President Vladimir Putin wants to allay concerns that the Kremlin is tightening its grip over oil assets amid global fears over energy security.

''Some of us haven't slept all night,'' Rair Simonyan, head of Morgan Stanley in Russia, one of the adviser banks, told Reuters.

''Now it has all ended in great success.'' Rosneft said the initial public offering, priced at .55 a share, gave Russia's No. 3 oil firm a market capitalisation of .8 billion, a premium to its local benchmark and biggest producer LUKOIL.

It said its value could rise to .2 billion with an over-allotment option. The stock rose 5 percent in London in conditional trading, which becomes official when the listing formally commences, valuing the company at as much as billion.

But as Rosneft's bankers toasted the sale in Moscow, YUKOS spokeswoman Claire Davidson said in London that the company was seeking a temporary injunction to postpone the IPO before Rosneft's shares make their market debut on Wednesday.

''We have instructed the court that the judicial review has to be completed before trading starts at 7 a.m. (GMT) on July 19. If the court can't meet that timetable, we have asked the court to introduce an interim injunction to postpone the IPO.'' ''If they allow the shares to trade, Britain's Financial Services Authority and London Stock Exchange will effectively be allowing investors to be part of a criminal process.'' FORMAL LISTING UK judge Mr Justice Charles said on Friday that the case would be heard on Monday, though he doubted that it could be completed before Wednesday. Some lawyers involved in the case, however, said they were optimistic it could be resolved in time.

The LSE said deals done before the first settlement on Wednesday would be void if the court blocked the listing.

YUKOS has threatened a lifetime of litigation after its key unit Yugansk was seized and sold at a state auction to pay for over billion of back-taxes, a move YUKOS says was part of a Kremlin campaign against the company and its politically ambitious founder, Mikhail Khodorkovsky, who was jailed for tax evasion and fraud.

Rosneft bought Yugansk in 2004.

Lawyers familiar with the matter said YUKOS was seeking to invoke the UK's 2002 Proceeds of Crime Act, which makes it unlawful for anyone to facilitate the retention of proceeds of crime, and targets money-launderers, smugglers and drug dealers.

Rosneft spokesman Nikolai Manvelov has dismissed the threat.

''Our lawyers consider that suits and court cases like that have no effect whatsoever on the placement,'' he said.

The FSA said on Friday that it had approved Rosneft's prospectus for the depositary receipts on Wednesday.

Oleg Jelezko, who helps manage MOSCOW, July 14 (Reuters) Russian oil firm Rosneft said on Friday its IPO, the world's fifth biggest, raised $10.4 billion, half of it from a handful of buyers including BP, but a UK court challenge from rival YUKOS threatened to delay its market debut.

Russia is keen to make a splash with the share offering as it hosts its first G8 summit this weekend. By sharing Rosneft with the likes of BP Plc, analysts say President Vladimir Putin wants to allay concerns that the Kremlin is tightening its grip over oil assets amid global fears over energy security.

''Some of us haven't slept all night,'' Rair Simonyan, head of Morgan Stanley in Russia, one of the adviser banks, told Reuters.

''Now it has all ended in great success.'' Rosneft said the initial public offering, priced at $7.55 a share, gave Russia's No. 3 oil firm a market capitalisation of $79.8 billion, a premium to its local benchmark and biggest producer LUKOIL.

It said its value could rise to $80.2 billion with an over-allotment option. The stock rose 5 percent in London in conditional trading, which becomes official when the listing formally commences, valuing the company at as much as $84 billion.

But as Rosneft's bankers toasted the sale in Moscow, YUKOS spokeswoman Claire Davidson said in London that the company was seeking a temporary injunction to postpone the IPO before Rosneft's shares make their market debut on Wednesday.

''We have instructed the court that the judicial review has to be completed before trading starts at 7 a.m. (GMT) on July 19. If the court can't meet that timetable, we have asked the court to introduce an interim injunction to postpone the IPO.'' ''If they allow the shares to trade, Britain's Financial Services Authority and London Stock Exchange will effectively be allowing investors to be part of a criminal process.'' FORMAL LISTING UK judge Mr Justice Charles said on Friday that the case would be heard on Monday, though he doubted that it could be completed before Wednesday. Some lawyers involved in the case, however, said they were optimistic it could be resolved in time.

The LSE said deals done before the first settlement on Wednesday would be void if the court blocked the listing.

YUKOS has threatened a lifetime of litigation after its key unit Yugansk was seized and sold at a state auction to pay for over $33 billion of back-taxes, a move YUKOS says was part of a Kremlin campaign against the company and its politically ambitious founder, Mikhail Khodorkovsky, who was jailed for tax evasion and fraud.

Rosneft bought Yugansk in 2004.

Lawyers familiar with the matter said YUKOS was seeking to invoke the UK's 2002 Proceeds of Crime Act, which makes it unlawful for anyone to facilitate the retention of proceeds of crime, and targets money-launderers, smugglers and drug dealers.

Rosneft spokesman Nikolai Manvelov has dismissed the threat.

''Our lawyers consider that suits and court cases like that have no effect whatsoever on the placement,'' he said.

The FSA said on Friday that it had approved Rosneft's prospectus for the depositary receipts on Wednesday.

Oleg Jelezko, who helps manage $2 billion worth of Russian assets at Renaissance Capital, said: ''It won't be possible to block the IPO. If they could, they would have done it by now.'' TOP DOLLAR The last-ditch claim came as the IPO success was guaranteed by strategic investors, though spurned by some global investors who said it was overpriced and legally risky. The pricing came at the top end of the initial price range of $5.85-$7.85.

Rosneft, which placed around 13 percent of its stock, said four investors, including oil and gas firms, would together buy around half of the IPO.

BP, which owns half of Russia's No.2 oil firm TNK-BP but has separate joint projects with Rosneft, said it bought $1 billion worth of Rosneft stock.

A market source said in Singapore China's CNPC was allocated shares worth about $500 million, below its order for $3 billion.

Bankers said Malaysia's Petronas had also bid.

Banking sources say strategic investors want closer ties with the Kremlin as its influence over the energy sector grows.

YUKOS's Davidson said BP had violated its own book of principles, but declined to say whether a suit would follow.

A BP spokesman said the decision to buy the shares was based on strategic and commercial considerations.

Including the $400 million over-allotment option, the IPO will be fifth biggest in the world, outstripping the recent Bank of China IPO.

Rosneft's key rival LUKOIL has larger reserves and far more refining capacity. But even at $77 billion, Rosneft is priced at a major discount to western firms on a reserves basis -- the industry's preferred measure -- implying $4 per barrel of reserves, compared with $13 per barrel at BP.

REUTERS DKS PM1824 billion worth of Russian assets at Renaissance Capital, said: ''It won't be possible to block the IPO. If they could, they would have done it by now.'' TOP DOLLAR The last-ditch claim came as the IPO success was guaranteed by strategic investors, though spurned by some global investors who said it was overpriced and legally risky. The pricing came at the top end of the initial price range of .85-.85.

Rosneft, which placed around 13 percent of its stock, said four investors, including oil and gas firms, would together buy around half of the IPO.

BP, which owns half of Russia's No.2 oil firm TNK-BP but has separate joint projects with Rosneft, said it bought billion worth of Rosneft stock.

A market source said in Singapore China's CNPC was allocated shares worth about 0 million, below its order for billion.

Bankers said Malaysia's Petronas had also bid.

Banking sources say strategic investors want closer ties with the Kremlin as its influence over the energy sector grows.

YUKOS's Davidson said BP had violated its own book of principles, but declined to say whether a suit would follow.

A BP spokesman said the decision to buy the shares was based on strategic and commercial considerations.

Including the 0 million over-allotment option, the IPO will be fifth biggest in the world, outstripping the recent Bank of China IPO.

Rosneft's key rival LUKOIL has larger reserves and far more refining capacity. But even at billion, Rosneft is priced at a major discount to western firms on a reserves basis -- the industry's preferred measure -- implying per barrel of reserves, compared with per barrel at BP.

REUTERS DKS PM1824