* L1 Energy to invest $10 bln equity, borrow rest
* German Khan to be CEO, recruiting managers
* Looking at 5-6 deals over 3-5 years
* First transaction likely in 2014
* Ex-CEOs Browne, Gould, Hackett join advisory board
By Douglas Busvine
MOSCOW, June 17 Billionaire Mikhail Fridman's
Alfa Group will invest $20 billion or more in global oil and gas
projects through a new fund it has set up that will be advised
by top-ranking former oil bosses, including ex-BP chief
executive Lord Browne.
The L1 Energy fund will be run by German Khan, a partner of
Fridman's, and will invest the bulk of Alfa's proceeds from the
sale of oil venture TNK-BP this year in what was Russia's
largest-ever takeover deal.
Alfa, which owned a quarter stake in TNK-BP, reaped $14
billion in March when state oil major Rosneft
completed the purchase of Russia's third-largest oil firm. The
bulk of that windfall will go into oil and gas deals.
"The shareholders plan to invest around $10 billion in
equity over the next 3-5 years in order to build a global oil
and gas business," Stan Polovets, who will be lead member of the
L1 Energy advisory board, told Reuters in an interview.
"With leverage, L1 Energy could spend over $20 billion on
acquisitions and partnerships by 2018."
In a statement, L1 Energy named Lord Browne, Andrew Gould
and Jim Hackett as members of the advisory board, which will
advise on overall strategy, investment opportunities, and review
investment performance and governance.
Browne, now a partner at energy-focused private equity fund
Riverstone, led BP from 1995 to 2007 and masterminded the
British oil major's highly profitable deal to buy a 50 percent
stake in TNK-BP back in 2003.
Gould is chairman of BG Group and was previously
chairman and CEO of oil services company Schlumberger,
while Hackett is former executive chairman and CEO of U.S. oil
independent Anadarko Petroleum Corp.
Khan, 51, a hard-charging boss who was executive director at
TNK-BP through its decade as a joint venture, is hiring a
management team for the fund and has brought in headhunters
NO TNK-BP 2.0
L1 Energy will be based in London and will be part of a new
investment vehicle being set up by Alfa Group that is called
This holding company, managed by TNK-BP's former chief
financial officer Jonathan Muir, will also include the group's
telecoms interests and funds raised from the TNK-BP sale.
The energy fund will make five or six investments over the
coming years, with a global focus that includes Russia, said
Polovets. Deals would either be full takeovers or acquisitions
of major strategic stakes that allow significant influence.
"We are not planning to spend $20 billion on one
acquisition," said Polovets, who was previously CEO of the AAR
shareholder consortium that owned half of TNK-BP. "This is not
about creating TNK-BP 2.0."
Fridman, Russia's second-richest man, worth an estimated
$16.5 billion according to Forbes magazine, and Khan, with a
fortune of $10.5 billion, have moved more quickly than their
former AAR partners, Viktor Vekselberg and Len Blavatnik, to put
their TNK-BP windfall to work.
L1 Energy will act as an active financial investor, but not
as an operator, reverting to Alfa's roots in the 1990s when
Fridman and his partners built a business empire that also spans
mobile telecoms, banking and retail.
With the disposal of its Russian oil business and push into
emerging markets by its main telecoms play, New York-listed
Vimpelcom, Alfa's portfolio has taken on an increasingly
Rosneft, meanwhile, is dragging its feet after saying it
would dispose of non-core assets in Russia to reduce its debts
and refocus on developing new reserves of offshore oil and gas,
and of hard-to-recover 'tight' oil in Siberia.
L1 Energy has not held any talks with Rosneft on possible
asset disposals, said Polovets, who will continue to be based in