MOSCOW Rosneft (ROSN.MM) shares rose to their highest in 15 months on Wednesday, gaining 3.6 percent on the day as investors anticipated a rise in valuations after an acquisition that will make it the world's top listed oil producer.
The state-controlled oil company has tightened its grip on Russia's oil industry, clinching a deal to buy Anglo-Russian TNK-BP that will also give Britain's BP (BP.L) a one-fifth stake in Rosneft.
"Rosneft moves to another league ... Maybe it will be included in a global index and investors will not be able to ignore its shares," said Alexei Bachurin, chief trader at Renaissance Capital.
The company's more liquid depositary receipts (ROSNq.L) gained 4.8 percent, following positive recommendations from investment banks. Bank of America Merrill Lynch saw a buying opportunity in Rosneft GDRs, expecting the price to rise to $9 per GDR from around $7.50 on Wednesday.
"We believe that the benefits of the proposed deal outweigh potential risks," the bank's analysts wrote in a note.
Once the deal is closed, Rosneft would become the largest listed oil company, while keeping its dividend payout ratio at 25 percent of earnings.
Investors are cautious over the hefty debt burden Rosneft must assume to finance the $55 billion takeover, however, and credit rating agencies Moody's and Fitch on Wednesday placed the company on review for possible downgrades.
Rosneft shares were also lifted by government officials saying Britain's BP's involvement in the oil major will not cancel its privatization plans.
Rosneft's acquisition of TNK-BP TNBP.MM will give BP (BP.L), one-fifth of Rosneft's shares and two seats on the board.
"The possibility of further privatization remains," Economy Minister Andrei Belousov told a briefing on Wednesday.
Russian shares were mixed in jittery trading on Wednesday, with metal and mining shares outperforming the broad market, cheered by China's PMI data, while the rouble strengthened from four-week lows on higher oil prices.
The rouble-based MICEX was down 0.4 percent at 1,450.0 points, while the dollar-denominated RTS index was up 0.2 percent at 1,459.4 points.
Metals and mining stocks stood out, with Norilsk Nickel (GMKN.MM) rising 0.6 percent and aluminum producer RUSAL RUALR.MM up 2.8 percent, reacting to an HSBC survey of Chinese manufacturing industry that suggested growth may be recovering in the world's second largest economy.
Shares in TNK-BP Holding TNBP.MM, a listed subsidiary that has a free float of around 5 percent, were up 2.6 after Tuesday's steep sell-off.
"We understand investors' concern: they can expect at least six months of uncertainty over Rosneft's stance toward them," analysts at Sberbank investment research wrote in a note.
The Rosneft deal is bearish for the rouble, suggesting increased capital outflows in the next several years when Rosneft starts paying off debt of around $45 billion it will use to finance the acquisition, Vladimir Osakovskiy, an economist for Russia at Bank of America Merrill Lynch, said in a note.
"We also see the deal as structurally positive for the rouble in the longer term, as we believe it would effectively boost the country's current account by reversing historically large dividend flow from TNK-BP," Osakovskiy added.
Stronger commodity markets helped the rouble on Wednesday gain 0.4 percent to 31.33 against the dollar.
Versus the euro, the rouble was up 0.4 percent at 40.60. It strengthened 0.4 percent to 35.50 versus its euro-dollar basket, the central bank's barometer of the currency market.
(Additional reporting by Zlata Garasyuta; Writing by Maya Dyakina; Editing by Jason Bush and Catherine Evans)