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A state-controlled Chinese firm has bought 36.2 percent in the unit of private company CEFC China Energy, through which CEFC is buying 14 percent in Russia’s Rosneft for US$9 billion, which could add further fuel to the growing media speculation as to what is happening to the private Chinese energy firm that has agreed to buy into the Russian oil giant.
Little-known private company CEFC China Energy puzzled analysts and industry observers when it said in September 2017 that it would buy 14 percent in Rosneft from Glencore and the Qatar Investment Authority (QIA). Six months later, the mystery surrounding CEFC China Energy is not only left unsolved—it has become even more unclear, with a flurry of media reports over the past week revealing that its CEO is under investigation by the Chinese authorities and that the Chinese state has taken over management of the company as it seeks to rein in private businesses and their unrestrained spending.
The flow of media reports about troubles at CEFC China Energy makes analysts question the company’s ability to close to the Rosneft deal, as it looks like that the Chinese firm is in the crosshairs of the crackdown on private businesses after President Xi Jinping’s government warned just last week that no Chinese billionaire, no matter how well-connected, is safe from scrutiny and investigation.
Related: The Mysterious Chinese Company Looking To Buy Rosneft
According to a filing of CEFC to an online portal run by China’s State Administration for Industry & Commerce (SAIC), reported by Reuters on Friday, state-held China Huarong Asset Management Co—the country’s largest distressed debt manager—bought the stake in CEFC China Energy subsidiary CEFC Hainan International in two tranches, one in December and one in February.
CEFC unit CEFC Shanghai International Group Co owns the other 63.8 percent in CEFC Hainan.
While it was not immediately clear how much China Huarong had paid for the 36.2-percent stake, the registered capital of CEFC Hainan increased by US$1.5 billion (9.6 billion yuan) after the transaction, according to the filing seen by Reuters.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.