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A consortium led by US billionaire Todd Boehly is preparing to acquire the international assets of sanctioned Russian oil giant Lukoil through a securities swap deal. Four people close to the process say a transaction could close within weeks.
How the Lukoil Asset Deal Would Work
A bank acting for the consortium has purchased billions of dollars worth of frozen Lukoil securities from Western investment funds. The plan calls for those securities to be exchanged directly for Lukoil’s foreign assets, making it a cashless transaction. Capital Group is among the Western investors holding frozen Lukoil securities involved in the arrangement, though the firm declined to comment.
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The sources, who spoke on condition of anonymity because they are not authorized to discuss the matter publicly, said the deal would be structured without any direct cash transfer to Lukoil. Instead, shares would be placed into an escrow account. This approach addressed a key concern raised by US authorities.
A Long-Running Sale Process
The sale process has dragged on for more than a year. It initially valued Lukoil’s international portfolio at $22 billion. That portfolio includes oilfields, refineries and petrol stations across Europe, the Middle East and Africa. However, two sources said the value has since declined because some assets have stopped operating.
US sanctions on Lukoil took effect in October 2023, triggering the sale process. In December of that year, the US Treasury rejected an earlier offer from a group that included US bank Xtellus Partners. Treasury officials objected because Lukoil stood to receive a financial windfall. The Boehly-led consortium later advanced by agreeing to place shares in escrow rather than transferring them directly to Lukoil. The US Treasury did not respond to requests for comment on the current deal.
Reuters also reported in February that the US had slowed the sale process partly to increase pressure on Russia during negotiations over its war in Ukraine.
Who Is Behind the Consortium
Boehly is a Miami-based businessman who holds ownership stakes in the Los Angeles Dodgers and the Los Angeles Lakers. His consortium also includes Emirati investors International Holding Company and Al Hail Holding, as well as the Syrian-Qatari Al-Khayat brothers. The US International Development Finance Corporation is also backing the bid. Representatives for Boehly, Al Hail, the Al-Khayats and the DFC did not respond to requests for comment. An IHC spokesperson said the company does not comment on potential investment activities.
More than a dozen companies had previously bid for Lukoil’s assets, including oil majors Exxon Mobil and Chevron, private equity firm Carlyle, and businessman Bernd Bergmair. Carlyle withdrew from the process last month, leaving the Boehly consortium as the leading contender.
Lukoil Securities Acquired at Deep Discount
The bank bought Lukoil securities from around ten US and British investment funds, as well as US depositary banks that held shares on behalf of retail investors. The securities changed hands at 30 cents on the dollar, reflecting their heavily discounted sanctioned status. Western funds had held large positions in Lukoil stock before Russia’s 2022 invasion of Ukraine. After the invasion, those shares were removed from major emerging market indices and subsequently frozen and written down.
