Daily Archives: Nov 26, 2012

More signs that Big Pharma is determined to further expand its footprint in emerging markets, with GlaxoSmithKline on Monday inking two new deals worth more than £650m ($1bn) in India and Nigeria.

The transactions – which will see the UK-based pharmaceuticals group increase its stake over two of its leading subsidiaries – are noteworthy. Whereas most of the industry’s past M&A efforts in EMs have been focused on securing new drugs and generics, GSK’s latest move is aimed at strengthening its presence in the consumer healthcare product space. 

As Felipe Calderón, the Mexican president, prepares to leave power this weekend, he dropped off yet another house-warming gift to his successor, Enrique Peña Nieto.

While Peña Nieto was packing his suitcase for a visit to Barack Obama in Washington, Calderón on Sunday announced a third major Mexican oil find in as many months, and the third of such importance in a decade, according to the view of many of those in the business. 

The effect of South Africa’s (mainly) mining strikes is being felt in company results and official data, one by one. On Tuesday it’s the big one – GDP – but on Monday it was the turn of miner Gold Fields, which reported a shrink in output and profits for the quarter.

The tone is set in the statement by chief executive Nick Holland: “The September quarter of 2012 will be remembered as one of the most challenging from an operational perspective…”, and continues in that vein for another 1,000 words. 

ConocoPhillips is in the middle of a long-standing streamlining programme, so there was little surprise on Monday when it announced the disposal of a chunky $5.5bn asset – its stake in Kazakhstan’s vast Kashagan field.

But the buyer’s name came as a shock. Given the enthusiasm of president Nursultan Nazarbayev (pictured) for Kazakhs to own more of the country’s mineral wealth, it had been expected that ConocoPhilips might sell to a Kazakh state group – for example, KazMunaiGas, the energy company, which expressed an interest only last month. Instead the purchaser is ONGC, the Indian state oil group. 

Qatar is positioning itself to sell liquefied natural gas to Egypt as it uses its financial firepower to cement its ties with Egypt’s new Islamist leadership in a time of unprecedented economic instability, writes Camilla Hall.

The world’s biggest exporter of LNG signed a joint venture with Egyptian private equity firm Citadel Capital last Thursday to build a floating LNG storage facility and re-gasification unit to deliver natural gas to Egypt. 

Emerging markets usually warrant a risk premium because they tend to be pretty risky – as CEZ, the Czech utility, is finding out with its troubled Albanian investment.

CEZ is moving to claim a World Bank guarantee on its investment in CEZ Shperndarje, a power distribution company in which it holds a 76 per cent stake (with the Albanian government holding the rest) – and a complete writedown of its total €160m investment is looking increasingly likely. 

Russian Alfa Bank, controlled by billionaire Mikhail Fridman, announced on Monday that its Belarusian subsidiary, Alfa Bank (Belarus), will acquire Belrosbank from Russian Rosbank, controlled by Société Générale. The move followed by failed negotiations with the Belarusian authorities to buy state-owned Belinvestbank.

The transaction is expected to be completed before the end of 2012, Alfa Bank said in a statement, but the bank did not disclose the price of the deal. 

Tullow Oil, the London-listed oil exploration company, has made another Kenyan discovery to go with the finds in the country earlier in 2012 – but investors were hardly impressed, sending the shares down nearly 2 per cent, mainly on the depth of the oil.

The company announced on Monday that it had found oil at the Twiga South-1 well, which it owns 50-50 with Africa Oil. But it encountered only 30m of net pay (the thickness of the oil reservoir), a far cry from the earlier Kenyan find of 100m. 

The Hungarian government of Viktor Orban puts great stress on the country’s history and culture: hence the lead story on the government website on Monday was of a squadron of hussars – light cavalry – parading in a show of pomp and colour around Buda’s Castle District on Saturday.

Good for local pride, perhaps, but buried six stories below (and only in Hungarian), was an item from late Friday that might have more bearing on the local pocket – the official riposte to Standard & Poor’s downgrading Hungary from BB+ to BB, with the outlook changing from negative to stable. 

By Phil Cain of bne

The Albanian government looks on course to complete the $850m sale of state oil company Albpetrol by its December 3 deadline.

Vetro Energy, a US-run consortium controlled by an Albanian businessman seen as an ally of the prime minister, has finalised the financing needed for the ground-breaking privatisation. 

A surge of remittances during the global financial crisis has helped to support the economies of some of the world’s least developed countries.

But a report published on Monday has underlined the high price such LDCs – including many poor countries in Africa – are paying for these transfers from migrants working abroad – a crippling “brain drain”. 

* Samsung reveals Chinese labour breaches

* Two bidders race for Aston Martin stake

* HK moves to make foreign listings easier

* Thailand: export recovery slow 

A financial big bang is unlikely to happen in South Korea any time soon, despite the government’s repeated promises to deregulate the financial industry.

South Korea’s leading brokerages are increasingly frustrated that the country’s revised Capital Markets Act aimed at fostering investment banks is now unlikely to be passed in parliament this year. 

Monday’s moments for reflection from the BB team: why default is a useful part of the system; dissecting POCC; and Olam gives its critics short shrift. Plus: why India slowed more than China; brand protection in Africa will be big business; and is Morsi more Mubarek or Lincoln? 

Aberdeen Asset Management on Monday published a fairly gloomy forecast for 2013, complete with a warning that investors aren’t likely to find much cheer even in emerging markets.

But the fund manager still backed equities over bonds, pointing out that despite the poor global economic outlook companies were generally in “very good shape”. Just a matter of picking the right stocks, we suppose.