November 21, 2011 / 8:11 AM / in 6 years

Hayward vehicle completes Iraq buy, shares flat

3 Min Read

LONDON, Nov 21 (Reuters) - The bid vehicle of former BP Plc Chief Executive Tony Hayward and financier Nathaniel Rothschild completed its controversial $2 billion acquisition of Kurdistan-focused Genel Energy on Monday.

An expected rise in shares of the group, previously known as Vallares and now known as Genel Energry Plc, failed to materialise. The stock traded up less than 1.0 percent at 1000 pence at 0805 GMT, ahead of a 0.8 percent drop in the STOXX Europe 600 Oil and Gas index.

The shares had been suspended since the deal was announced in September.

Analysts had predicted a significant rise in the shares, because the group had made good on its pledge to find emerging market oil reserves for a modest price.

Some analysts also predicted the group's plans to bolt on other acquisitions in the semi-autonomous Kurdish region of Iraq would be a winner with investors.

The shares were also expected to get a lift from the fact the company expects to enter the FTSE 100 index of the UK's largest companies, which means passive, tracker funds will be forced to buy its shares.

The deal marks Hayward's return to a senior management role in the oil business after being forced out of BP following the Gulf of Mexico oil spill. He will be CEO of Genel Energy Plc.

However the deal has been criticised for giving Genel's former owners a fast-track route to a London Stock Exchange listing -- something they previously tried to achieve before one of them, Mehmet Sepil, received a major fine from the financial Services Authority for insider dealing.

Mehmet Karamehmet, the other major shareholder, was accused in a U.S. diplomatic cable posted on the Wikileaks website of issuing death threats to a former business partner.

Earlier this month Turkey's appeals court called for his retrial on charges of embezzlement, after a previous conviction was overturned.

Karamehmet and Sepil will own around half of Genel Energy.

The FTSE Group said earlier this month it was looking at tightening entry requirements for its UK indices in response to investor concerns it is too easy for companies with low free floats and hazy corporate governance standards to join the prestigious FTSE 100.

The Association of British Insurers, whose members own 20 percent of the UK stock market, is worried stocks enter the FTSE 100 too easily and is exploring ways to put would-be entrants under closer scrutiny, an insurance industry source told Reuters.

Hayward and Sepil have said in interviews recently they thought the Kurdish assets of Norway's DNO would be a good fit for Genel Energy. Other potential acquisition targets include Canada's ShaMaran Petroleum and Longford Energy.

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