Business
BP Chief Woos Middle East Investors
Chief Executive Officer of BP Plc, Mr. Tony Hayward, who is holding meetings in Abu Dhabi, may seek support from Middle East sovereign funds after the oil spill in the Gulf of Mexico halved the company’s share price, UBS AG said.
According to a report by Bloomberg, Hayward arrived on Tuesday in Abu Dhabi, which has one of the world’s largest sovereign wealth funds.
He declined to say whom he was meeting at the city’s Emirates Palace hotel, where BP hosted a meeting on Wednesday.
“The option for chasing strategic investors in the Middle East is a sound one,” the Dubai-based head of Middle East research at UBS AG,Saud Masud, said in a Bloomberg Television interview on Monday. “They have significant capital; then they also invest for the long-term.”
Sovereign wealth funds in the Middle East may be interested in buying BP stock after its price dropped by about half since the start of the Gulf of Mexico oil spill, the worst in US history.
Hayward last month pledged to set aside $20bn to compensate the spill’s victims and finance the cleanup. To pay for it, the company cancelled three quarters of its dividends and planned to sell $10bn in assets across the globe.
BP Plc would be willing to sell a 10 per cent stake in the company to Abu Dhabi, the Wall Street Journal reported, citing an unidentified person with knowledge of the matter.
“Tony is meeting key business partners and BP staff,” spokeswoman Sheila Williams said by phone. “We have said that we’re not looking to issue new equity.”
The London-based oil giant would benefit from drawing in capital by easing the pressure for rapid sales, said Rachel Ziemba, a senior analyst who tracks sovereign wealth funds at Nouriel Roubini’s New-York based Roubini Global Economics.
“Raising capital gives more room for manoeuvre by putting less pressure for asset sales,” she said by phone from London. “Buyers may demand a discount.”
Qatar’s sovereign-wealth fund and Mubadala and the International Petroleum Investment Co. in Abu Dhabi are the most likely to be interested in acquiring a BP stake, according to Ziemba.
Abu Dhabi’s sovereign funds hold a combined $500bn, according to Roubini Global Economics.
Sovereign funds traditionally “have invested in the European and western markets in large cap names, and when you can pick up BP at 50 per cent cheaper than its recent highs, then it makes a lot of sense for both parties,” Masud at UBS said.
Spokesmen for the Abu Dhabi Investment Authority and the International Petroleum Investment Company declined to comment on whether Hayward is scheduled to meet officials there. A spokesman for the Qatar Investment Authority also declined to comment.
The facility will be disbursed through participating Microfinance Institutions (MFIs), which will in turn extend the loans to their customers, particularly SMEs, as they directly interface with businesses at the grassroots level.
The Executive Director of COMCIN, Mr. Micheal Ogbaa who represented the Chairman, Dr. Iredele Oyedele (FCA, FCCA), said the initiative is designed to strengthen micro-lending institutions and expand access to finance for grassroots entrepreneurs, particularly women and youths in the informal sector.
Ogbaa explained that COMCIN does not lend directly to individuals but works through its network of microfinance and cooperative institutions, which in turn provide loans to end users.
“We came together to advocate for the microfinance ecosystem. Commercial banks often exclude people at the grassroots, but our members are positioned to reach them. This facility will empower them to do more,” he said.
He noted that the loan scheme offers low interest rates and flexible repayment plans, making it more accessible to small business owners.
According to him, about 90 percent of beneficiaries are expected to be women, who play a key role in sustaining families and driving economic activities at the local level.
“Our focus is on traders, service providers, and players in the informal sector. These are the real movers of the economy. By supporting them, we are strengthening families and contributing to national development,” he added.
Ogbaa disclosed that eligible SMEs with proven integrity and business track records could access up to N5 million each through participating micro-lending institutions. The rollout has commenced in Lagos and will extend to Abuja, Enugu, and other regions, including the South-West, South-East, and North-East.
He said 12 micro-lending institutions have already benefited from the scheme, while 85 applications are currently being processed under the pilot phase.
“Our target is to reach at least 100,000 SMEs nationwide. We are building a platform that connects funding partners with credible micro-lending institutions, creating a reliable channel for financial inclusion,” Ogbaa said.
He added that COMCIN is also working to attract larger funding pools from development finance institutions and private investors, noting that successful implementation of the pilot phase would boost confidence and unlock more capital for SMEs.
“We have seen encouraging testimonies from early beneficiaries. As we demonstrate transparency and efficiency, more institutions will be willing to channel funds through us,” he said.
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