June 9, 2011 10:06 pm

Hayward seeks to raise £1bn for venture

 
Tony Hayward (right) and Nat Rothschild

Conversations between Nat Rothschild and Tony Hayward, right, led to the idea of Vallares, which is modelled on Vallar – the cash shell

Looking tanned and relaxed, Tony Hayward appears a different person from the drawn, embattled executive who gave testimony to a hostile Congress in Washington last summer at the height of the crisis engulfing BP.

Less than nine months after leaving the UK oil group after the Gulf of Mexico spill, its former chief executive is back in the corporate limelight with a £1bn ($1.64bn) fundraising of an oil and gas venture. Backed by a group of powerful friends, industry contacts and blue-chip investment funds, Mr Hayward’s new venture, Vallares, will list on the London Stock Exchange with the ambition of becoming a FTSE 100 oil and gas company.

When he left BP in October – his departure came after protests over his handling of the crisis, including infamously saying he wanted “his life back” – he “took some time to think”.

“I was clear that I did not want to run another large, conventional oil and gas plc ... Once you’ve run BP, the company I spent my life at, you can’t re-create that experience so the challenge was staying in the industry but doing something very different. This fits that bill,” he says.

Vallares is modelled on Vallar, the cash shell listed by Nat Rothschild last year, which raised £700m and paid $3bn for stakes in two of Indonesia’s largest coal miners, Berau Coal Energy and Bumi Resources.

Bumi, with more than $3bn (£1.8bn) net debt, has faced allegations of tax evasion – which it denies – and has a long history of run-ins with environmental groups. It is owned by the politically connected Bakrie family, whose patriarch, Aburizal Bakrie, heads the party of Indonesia’s former dictator, late President Suharto. A similar idea for an oil and gas-focused fund came from conversations between Mr Hayward and Mr Rothschild last Christmas.

“It struck me as an interesting structure and we debated whether it could apply to oil and gas,” says Mr Hayward. By April, the conclusion was it could and investors were approached a few weeks ago.

“We were pleasantly surprised by the extent of the support,” says Mr Hayward.

His extensive contacts book from almost 30 years at BP clearly helped open doors at institutions and sovereign wealth funds. Was he worried that last year’s events at BP, which saw Mr Hayward at one point denounced as the most hated man in the US, would colour the pitch? “You never know until you ask but there was enthusiastic support,” he says carefully. US investors, he adds, “were professional and respectful”.

Mr Hayward says Vallares will not use the capital it raises to buy assets for cash “because we have no competitive advantage in doing that”. Instead, the company will target an emerging market player with “good quality assets that have neither the capital nor the capability to move them forward but by the same token don’t want to sell out”.

Vallares, he adds, offers an emerging market company “a short-cut” to a London listing. The company that emerges will be run by him with a carefully selected team. Nevertheless, the structure also brings with it potential corporate governance risks.

Vallar, whose final transformation will involve it renaming as Bumi plc and being admitted as a full listing, is six weeks behind schedule due to an accounting technicality at a subsidiary of Bumi Resources.

Julian Metherell, one of the co-founders of Vallar, plays down the potential pitfalls about bringing an emerging markets player to London, arguing that “this is where part of the value proposition lies”.

The founders have “a pipeline of potential ideas” but will not buy anything that requires big capital investments. “We’re not going to try and do the Arctic in Russia,” says Mr Hayward. He will not comment on BP’s travails in Russia, nor on his successor’s performance. His focus, he says, is on the future.

Does he have any regrets? He avoids the question, saying: “I had a great time at BP, it’s a wonderful company. I will always love it dearly but the future is about the future, not the past.”

Additional reporting: by Anthony Deutsch in Jakarta and William MacNamara in London

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.

NEWS BY EMAIL

Sign up for email briefings to stay up to date on topics you are interested in

SHARE THIS QUOTE