Investors peering through the receding fog of war will find plenty of promise and a few pitfalls in a post-Gaddafi Libya.If peace takes hold in Africa's largest oil producer after a six-month civil war, the long-dormant economy could rapidly flourish provided there has been no substantial damage to the oil and gas infrastructure underpinning its national wealth.Much remains undecided as anti-government forces gain control of Tripoli in their final push to end the four-decade rule of Muammar Gaddafi but a new Libyan government could herald a bonanza for Western companies and investors."Libya is a fantastically wealthy country that doesn't need foreign money but foreign expertise. This could be the start of an experiment in hydrocarbon-fuelled capitalism with a lot of money up for grabs," said Emad Mostaque, Chief Middle East and North Africa strategist at Religare Capital Markets.Though less advanced than the rest of North Africa even prior to the civil war, the Libyan economy has ample resources it could marshall for national reconstruction.An estimated $150 billion in sovereign assets once controlled by Gaddafi and his inner circle has been frozen abroad by foreign governments and 144 tonnes of gold is held by the Libyan central bank.Wealth And PoliticsCombine that with a modest population of 6.4 million and standards of education on a par with established emerging economies such as Malaysia and Mexico, and Libya looks well placed for recovery, said Sven Richter, head of frontier markets at Renaissance Asset Managers."From that point of view, they are in a quite enviable position," he said.A sovereign wealth fund set up in 2006 to manage Libya's oil revenues could also prove pivotal if the new government does not purge all personnel associated with Gaddafi.Though somewhat depleted, the Libyan Investment Authority still holds billions of dollars in cash and a number of lucrative equity stakes in Western blue-chip companies such as Pearson and UniCredit.It could spearhead infrastructure development and make up for some of this year's slump in foreign direct investments, which according to United Nations data swelled Libya's coffers by $3.8 billion last year.Investment from the fund could also help broaden the Libyan economy away from oil and help attract other sovereign wealth funds and longer term foreign investors.Politics, however, remains key."In the last couple of weeks, there have been increasing questions about the unity of the rebels, especially after the killing of General Abdel Fattah Younes just 12 days ago," said Raza Agha, MENA economist at RBS.The death of the rebel military commander after he was taken into custody by his own side for questioning remains unexplained, underscoring the disparate nature of the rebel National Transitional Council as a mix of Gaddafi opponents."Beyond Gaddafi, there is a lack of any unifying institution or individual. In Egypt and Tunisia, for example, the military was held in high esteem by the population," said Agha.West FriendlyIf it can hold together, the new government is likely to be friendly towards the West, having come into power supported by NATO air strikes.An official at Libyan rebel oil firm AGOCO has already said the company may have difficulties working with China, Russia and Brazil which opposed tough sanctions on Gaddafi.So Western companies look well positioned as billions of dollars in oil exploration and construction contracts come up for grabs as part of the reconstruction effort.Religare's Mostaque also expects Qatari banks and firms to benefit when Libya reopens its doors to investment.Qatar was quick to establish links with Libyan rebels and was the first Arab country to contribute planes to police United Nations-backed no-fly zones over the country.Until fighting broke out in February, Libya was the world's 12th largest oil exporter though its output was modest, coming in at about 1.6 million barrels a day or 2 per cent of global oil output. The disruption of Libyan supply was thus easily compensated by increased Saudi production.The incoming government will likely focus on raising the country's production capacity with a view to capitalising on its oil reserves, the ninth largest in the world.Investors also see potential in Libya's banking and insurance sector, which briefly enjoyed foreign investor interest when decades of Western sanctions were lifted in 2004.France's BNP Paribas took a minority stake in a local bank when banking rules were eased and Renaissance's Richter expects foreign interest to revive when stability returns."Financial services demand will be driven by the oil industry," he said.(Reuters)
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Investors including a fund managed by Morgan Stanley and the Government of Singapore Investment Corp are in separate talks to buy a Mumbai property from textiles firm Alok Industries for about $200 million, two sources with direct knowledge of the matter told Reuters.The company has been looking to sell a building and the land it sits on in central Mumbai, said the sources, who declined to be named as they were not authorised to speak to the media.Sunil Khandelwal, chief financial officer of Alok Industries, told Reuters that the company is in sale talks for the assets with several funds, but no decision has been made.Both Morgan Stanley and GIC declined to comment.Other Mumbai textile firms including Bombay Dyeing, Century Textiles, Provogue India, and Arvind Ltd are also trying to sell or develop real estate assets in India's financial capital, where office towers have sprouted on the sites of former textile mills.Private equity investment in Indian property is down slightly this year to about $784 million, from $817 million at the same time last year, data from VCCircle.com, an industry tracker, showed.Domestic fund houses including Kotak Real Estate Fund, IndiaReit and ASK Investments are all in the process of raising funds totalling about $1 billion, fund officials have told Reuters.(Reuters)
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Reliance Industries on Tuesday regained its position as the country's most-valued firm company, while state-run Coal India slipped to third slot within a week of toppling the Mukesh Ambani-led corporate giant from the top.After slipping to second position after RIL in early morning trade, Coal India (CIL) lost further ground and moved to third position behind another PSU major, ONGC, in the market valuation charts.RIL had the top market value of Rs. 2,46,507 crore on the BSE as of 1135 hours, followed by ONGC's Rs. 2,42,847 crore and CIL's Rs. 2,41,822 crore.The shares of all three companies were trading in the red on the BSE, but the losses were sharper for Coal India.While RIL was down 0.44 per cent at Rs 752.90, ONGC was 1.01 per cent down at Rs 283.85 and CIL was trading 3.15 per cent lower at Rs 382.85.At the end of Monday's trade, Coal India was ranked the most valued company with a market capitalisation of Rs 249,685.88 crore, followed by RIL's 249,685.88 crore and ONGC's 245,328.68 crore.Earlier, on 17 August, CIL had toppled Reliance Industries to emerge the country's most valued firm, thus ending the private sector corporate giant's over four-year reign at the top of the market valuation charts.Two days later on August 19, RIL briefly fell behind ONGC to third position in the market valuation charts, but returned to the second slot before the market close.Interestingly, RIL had toppled state-run ONGC over four years ago to become the country's most valued firm.A company's market valuation, or market capitalisation, is determined by multiplying its share price by the total number of shares.CIL and ONGC had been closing the gap on RIL in terms of market valuation for the past few weeks, as RIL's stock has been under selling pressure and the two PSUs have been mostly performing well even in a weak market.However, a sharp rally in RIL and ONGC stocks yesterday and a relatively sharper fall in CIL shares this morning led to the coal major losing its traction over the two energy giants.RIL had first toppled ONGC to become the country's most valued firm way back in late 2006, but the state-run energy giant later reclaimed its top position, albeit only for a brief period. RIL has managed to stay on the top since February, 2007, except for the past few days.(PTI)
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British oil firm Cairn Energy said it was focussing on concluding a long running deal to sell a stake in its Indian unit to Vedanta, but was also looking at opportunities to explore for oil and gas in Lebanon."Cairn is encouraged that the Vedanta transaction is moving towards completion," said the company in a statement alongside its interim results on Tuesday."The conclusion of the Vedanta transaction in the coming months is a key focus for the group."In June, India granted conditional approval for Vedanta to buy a stake in Cairn India in a $6 billion deal that was first announced in August 2010.The parties are currently working to satisfy the conditions for the deal to complete, said Cairn.Part of the cash returned from the Indian transaction could be used to fund exploration in the Eastern Mediterranean where Cairn said it has teamed up with a Lebanese private company and UK-based explorer Cove Energy.The company said it wanted to participate in a licencing round in Lebanon, expanding its reach to a new frontier basin.Cairn also plans to spend $600 million in Greenland this year drilling up to four wells in its attempt to open up a new oil province, but has so far had little success in the Arctic territory.The company said it had cash of around $1 billion on June 30, with a production of around 167,000 barrels of oil in the first half, and revenues of $1.3 billion.Shares in Cairn, which have fallen 26 per cent in the last month, closed at 289.7 pence on Monday, valuing the company at around 4 billion pounds ($6.6 billion).(Reuters)
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India-focused refiner and power generator Essar Energy's earnings rose 49 per cent in the first-half of the year on the back of higher refinery margins, but the company said it continues to battle delays to regulatory approvals.The company said it is still awaiting forest clearance from the Government of India for its Mahan, Chakla and Ashok Karkata coal blocks which will provide fuel for the Mahan I and Tori power stations."Delays to regulatory approvals and delays to the access of fuel supplies are a cause for concern," Essar Energy said on Monday. "Not only do these delays impact the economic returns on projects, but they are acting to discourage investment in the sector from project sponsors, debt providers and equity investors."For the six months ended June 30, the company posted earnings before interest, tax, depreciation and amortisation (EBITDA) of $477.9 million, up from $320.2 million last year.Refining and Marketing EBITDA was up 73 per cent to $385.7 million, as refining margins rose 38 percent to $8.3 per barrel."Strong global demand, the earthquake in Japan and events in the middle east and north Africa pushed up refining margins in the first half of 2011 and they have remained at these elevated levels," Essar Energy said. "We believe refining margins are likely to remain at current levels through to the end of 2011."Refining margins are the difference between cost of crude oil and wholesale price of petroleum products like gasoline.Shares in the company closed at 257.7 pence on Friday, valuing the business at about 3.4 billion pounds ($5.6 billion).(Reuters)
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Brent crude rose above $113 on Monday, gaining for a third straight day as hopes of oil demand growth during winter overshadowed concerns about the European debt crisis.Low fuel inventories in the world's top oil consumer United States amid signs of an earlier-than-usual onset of winter may prompt refiners to ramp up output. That may further squeeze an already tight crude market coping with disruption in supplies from Libya and the North Sea."The tight supply situation is supporting the crude oil market, even though prices are being influenced by headline news out of Europe," said Natalie Robertson, an analyst at ANZ. "Inventory levels are low and looks like we have an earlier than usual onset of winter."Brent crude gained $1.04 a barrel to $113.01 by 0611 GMT. It settled $1.14 higher on Friday, above its 100-day moving average of $111.13, rising for a second consecutive week.U.S. crude traded 21 cents higher at $94.47 a barrel. The contract increased 1 per cent last week, posting a fifth straight weekly gain.Tens of thousands of homes remained in the dark on Sunday a week after a freak October snowstorm paralyzed the U.S. Northeast and cut power to more than 3 million customers. In Connecticut, more than 112,000 Connecticut Light & Power customers were still in the dark.Despite the cold spell in the United States, Brent prices have strengthened more than the U.S. contract because supply tightness of grades linked to the European benchmark is more acute, Robertson said."We have had output issues with North Sea crudes," she said. "Libya is still not back up fully."U.S. crude prices would rise towards $100 a barrel if they break past $95 due to supporting factors such as winter demand, said Tetsu Emori, a fund manager at Astmax Co Ltd in Tokyo. The benchmark may rise close to $105 towards the end of the year.Investors are also watching the unfolding bankruptcy of MF Global. CME Group and IntercontinentalExchange Inc moved over the weekend to limit the fallout from the MF Global bankruptcy on futures markets by lowering margin requirements on some accounts.Demand OutlookThe CME also said on Monday that it has asked brokers who have taken over customer accounts from MF Global, which filed for bankruptcy on Oct 31, to not disburse any of the money until the close of business on Tuesday as it looks to verify the amounts involved."The market is more concerned about macroeconomic factors, and that is why the MF story is not creating much of an impact," Robertson said.Riskier assets, from base metals to the stock futures, pared gains made earlier in the day as investors shifted their focus from Greece to another debt-burdened country, Italy.Italy is the third largest economy in the euro zone with the biggest government bond market. With Italy's debt levels stuck at 120 per cent of GDP, the country's debt problems would pose a much bigger risk to markets than Greece does.Markets had risen in early Asian trade on optimism European leaders would be able to contain the debt crisis with Greek Prime Minister George Papandreou and opposition leader Antonis Samaras agreeing on a new coalition government."The leaders have reached some agreement, but that does not mean the debt problems of Greece and Europe have been solved," Emori said.Crude benchmarks are finding support on concerns of supply disruptions from major producers in the Middle East and North Africa as winter demand sets in.Qatar's prime minister called for Arab states to meet next Saturday to weigh Syria's failure to implement a deal struck with the Arab League to end bloodshed that was touched off by the popular uprising against President Bashar al-Assad.(Reuters)
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India's Jaypee Group, the $3 billion engineering and construction conglomerate, is in talks to sell a stake in its cement unit Jaiprakash Associates, the Economic Times newspaper reported on Monday citing a company executive.Jaypee has approached a number of investors including Singapore state investor Temasek Holdings regarding a stake in Jaiprakash, India's fourth-largest cement company by sales, group managing director Manoj Gaur was quoted as saying.The stake sale is part of fundraising to reduce the group's debt, which stands at around $8 billion, the report said.A spokesman for Jaiprakash, which has production capacity of 26.20 million tonnes, could not be reached for comment.Cement firms in India, the world's second-largest producer after China, have seen reduced demand in recent quarters on excess supply and a slump in construction due to high interest rates and slowing economic growth.Switzerland's Holcim owns a 46 per cent stake in ACC and Ambuja Cements India's second and third-largest cement firms.Jaiprakash, ACC, Ambuja and industry leader Ultratech control around 50 per cent of India's cement market. (Reuters)
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Trinamool Congress MPs are likely to meet Prime Minister Manmohan Singh in Delhi on November 8 against the backdrop of the UPA ally's threat to pull out of the government on the petrol price rise issue."After a talk with the Prime Minister, we will return here on November 9 and report to party supremo Mamata Banerjee who will take the final call," Chief Whip of Trinamool Congress Parliamentary Party in Lok Sabha Sudip Bandyopadhyay told PTI Sunday."I have sent a letter to the PMO seeking an appointment on November 8. I am expecting that the appointment will be fixed on November 8 since the PMO told me that he (Singh) will be abroad on November 9", said Bandyopadhyay, also a Union minister.He said he would leave for Delhi tomorrow and other MPs would reach the capital on November 8. Trinamool Congress has 18 members in the Lok Sabha.The TC parliamentary party has already authorised the party chief to take the decision in the matter after they decided on November 4 to pull out of the government if there was no rollback.Bandyopadhyya said, "We'll express our concern to the prime minister. There is a huge lack of co-ordination among the constituents in the UPA. No meeting is held with the allies before taking policy decisions. We want to express our sentiments to the prime minister."We are a pro-people party. Fuel prices were hiked 11 times in 12 months," he said.Pawar Backs GovtAgainst the backdrop of the Trinamool Congress' threat to pull out of UPA over the petrol price rise, NCP chief Sharad Pawar backed the government Sunday on the issue."There is no point in blaming the govt for increase in the domestic prices (of fuel) as they are related to fluctuations in the international markets," Pawar said defending Prime Minister Manmohan Singh on deregulation of the fuel prices.On Trinamool Congress' threat to withdraw from the UPA government, Pawar said, "Our stand is to remain with the government."Asked to comment on the Prime Minister's remarks on deregulation, Pawar said Singh was an economist of international repute and he (Pawar) was not a "super economist" to comment on what the Prime Minister had said.The Prime Minister has justified the hike in petrol prices, saying there should be further movement towards deregulation of fuel prices."Well that is the general direction in which we should move. I think the move to decontrol the prices is a part of that process," Singh had said.The Prime Minister's comments had assumed significance in the context of stiff opposition to the hike in petrol prices under the deregulated system.Trinamool Congress chief Mamata Banerjee had claimed on Friday that her party and allies like the NCP and the DMK were not consulted on the petrol price hike.(PTI)
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