Email This Post - Print This Post Print This Post

By John Helmer, Moscow

After months of speculation that the recent Rothschild family flotation Vallar Plc would buy a Russian iron-ore or coalminer, Vallar has announced in London that instead it is buying an Indonesian steam coal group owned by Aburizal Bakrie (right image). Bakrie is described in the Financial Times as “arguably Indonesia’s most powerful businessman”.

Bumi Resources and Berau are to take 43% and 25%, respectively, of Vallar’s shareholding, leaving Rothschild and his associates with almost 4%, and ordinary shareholders, 28%. The Vallar name will disappear and be replaced by Bumi Plc. The value of the deal as reported in the London financial press yesterday is around $3 billion.

Vallar raised ₤687 million ($1.1 billion) at its July flotation on the London Stock Exchange. Jacob Rothschild promoted the listing to institutional shareholders like Schroders (7.3%), Fidelity (1.1%), Hartford (1.2%), and Legal &General (0.7%). His son Nathaniel was the controlling shareholder.

Vallar was then expected by market sources to borrow more money to fund a takeover of target mining assets in the emerging markets of Asia, Russia, or the Americas. The price tag Vallar thought it could afford was “between £2 billion and £5 billion” ($3.2 billion-$8 billion). It appears the Rothschilds have gone for the bargain basement.

The disclosure of the deal with the Indonesian oligarch leaves two Russian oligarchs out in the cold, if sources predicting a negotiation between Vallar, Alisher Usmanov (left image) and Andrei Skoch (middle image) were to be believed. Usmanov owns 50%, Skoch 30% of Metalloinvest, a Moscow-based holding of two iron-ore mines and two Russian steelmills, with a joint venture steel rolling mill in the United Arab Emirates. According to Usmanov, the Metalloinvest assets which he, Skoch, and a third shareholder, Vasily Anisimov control, are worth between $15 billion and $20 billion. So they he may have been asking Nat Rothschild $8 billion for roughly the same size of stake which Bakrie has agreed to sell for $5 billion less.

One thing Bakrie and Usmanov have in common – the company debts Vallar is taking on from Bakrie are $4.4 billion. Metalloinvest’s current debt is $4.5 billion.

Leave a Reply