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Fund pick Repsol falls on Argentinian nationalisation plans

Spanish oil firm Repsol has seen its shares fall after Argentina announced plans to renationalise YPF, the country’s biggest oil company.

Repsol is found in the portfolios of several UK funds. These include Frédéric Leguay’s £586.4m HSBC GIF Euroland equity fund, where it has a 2.73 per cent weighting*, and Richard Halle and Daniel White’s £112.8m M&G European strategic value fund, where it accounts for 2.8 per cent of the portfolio*.

Repsol’s shares were down 7.11% to €16.32 (£13.49) in Madrid at the time of writing, while they dropped 10.43 per cent in Buenos Aires to ARS 115 (£16.46).

Yesterday, the Argentinian government said it will oust Repsol as the majority shareholder in YPF by declaring the 51 per cent Class D shares stake owned by the Spanish firm as subject to expropriation.

“Repsol considers the announced measure to be manifestly unlawful and gravely discriminatory, that its public interest has in no way been justified and clearly contravenes the obligations undertaken by the Republic of Argentina during the privatisation of YPF, breaching the most basic principles of legal certainty and of reliance by the international investment community,” a statement from the firm says.

The company owns a 57.43 per cent stake in YPF, with a book value of €4.122 billion at the end of 2011. Furthermore, YPF accounted for 25.6 per cent of the group’s operating income and 21 per cent of its net income in 2011.

Despite this, Repsol says Argentina’s plan will not affect its growth outside of Argentina and pointed out that the move will see the group’s debt reduced by €1.6 billion.

“Due to the soundness of the financial position of Repsol, this decision will not affect its developments plans nor its dividend policy,” the group adds.

The AFP news agency reports that Repsol will seek compensation of at least £6.3 billion, while chief executive Antonio Brufau said: “These acts will not remain unpunished.”

* as of February 29

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