In October, the Russian Government adopted a privatisation scheme for reducing the budget deficit. The proposed list includes energy, transport and banking companies. The list includes Rosneft, the largest oil manufacturer in Russia, VTB and Sberbank banks, Federal Grid Company (FSK), Rushydro, Russian Railways, sea transport company Sovcomflot and air transport company, Aeroflot. “The privatisation plan is a structural change in Russia’s economy”, declared Prime Minister Vladimir Putin.
For some companies, the privatisation will mean selling all shares, while for others only part of shares, so that Russia could maintain control. The privatisation scheme will be implemented in two phases. The first phase will last until 2013, while the second expands to 2015.
In 5-years time, the implementation of the privatisation scheme could bring Russia EUR 50 Billion. “We will have a privatisation scheme for almost 5 years with an estimated value of USD 10 Billion per year”, declared the Russian Minister of Finances, Alexei Kudrin, during a summit on investments held in Russia in September 2010.
This figure marks a significant growth in the return of the previously announced project, according to which the privatisation process will bring Russia USD 29 Billion from share sale in 3 years.
“For the first time in Russia’s history, the government could offer a quarter of Russian Railways’ monopole during 2012-2013”, declared Russia’s First Deputy Prime Minister, Igor Shuvalov. However, there are different opinions about selling 25% of Russian Railways shares. If the Transport Minister, Igor Levitin, said that “we cannot sell more than 10% in Russian Railways”, the company’s President, Vladimir Yakunin, said “the state could sell over 15% of shares through initial public offer by 2013”.
Also, during 2010-2012, RZD could sell shares estimated at RUB 150 Billion (USD 4.91 Billion) within its subsidies. “RZD Board has ratified the concept and plan on selling share packages within 48 of its branches”, said Valery Reshetnikov, the company’s vice president, during a meeting with representatives of the Ministry of Transport.
Therefore, RZD will sell shares from the largest manufacturer of signalling systems in Russia, Elteza, 100% owned by RZD. Russian Railways Board has approved the outcome of the tender which aimed at selling 25% plus one share. Participants were asked to consider the possibility to buy 50% minus 2 shares of Elteza and come up with strategies to jointly develop the company. The company is estimated at RUB 3.794 Billion (around EUR 90 Million). The shares of freight operators, RZD members, will also be put to sale, the money thus obtained being dedicated to railway investments.
First operators targeted: Freight One and TransContainer
The privatisation of Russian railway freight operators is the most important process on the railway market. The fact that RZD sells shares from Freight One and TransContainer helps the market develop fast, as there are many investors interested in investing in new projects to grow their business. Therefore, the worth of 75% of Freight One’s shares exceeds USD 6 Billion and, according to the company’s general manager, Salman Babayev, “50% plus 1 share could be sold to strategic partners, while 25% minus 2 shares could be sold through initial public offer”. Talking about the potential buyers of the operator, Vladimir Yakunin, RZD President, said that Freight One could be sold to Gennady Timchenko (a group holding business in the energy sector), Vladimir Lisin (operates steel activities) or
Globaltrans. “Globaltrans is interested in buying participation in Freight One”, declared Alexander Eliseev, President of Globaltrans Board, without specifying estimates about the transaction.
Another important transaction is selling part of the shares of railway freight operator, TransContainer. Therefore, foreign or local investors could buy 35% minus 2 shares, participation sold at real price, evaluated based on an independent report. The operator could be evaluated at USD 1.2 – 1.5 Billion which means the offer made by RZD could reach USD 420-525 Million, according to Reuters press agency.
In November, FESCO Transportation group announced the acquisition of 12.5% of TransContainer’s shares at a price of USD 138.9 Million. “Container transportation is the most promising segment in the industry. For FESCO, the acquisition of TransContainer shares is much more than just an investment. Cooperation with TransContainer will boost innovations in the national transportation system, repositioning Russia on the global container market as a key transportation route connecting Asia and Europe”, Sergey Generalov, FESCO President and CEO, declared.
According to the Russian press, TransContainer could buy 50% of the container transport operator in Kazakhstan, Kedentransservice. “Kommersant” newspaper commented that TransContainer will purchase a 67% participation from private investors and then 17% of shares will be sold to the national company in Kazakhstan, Temir Zholy, which holds 33% of Kedentransservice operator. Market players believe Russian operator TransContainer is interested in additional incomes outside Russia gained through transport flows from China.
As TransContainer’s activity continues to grow, the operator’s worth also grows. Thus, the operator’s net income increased eight times in the first three quarters, compared to the same period last year exceeding EUR 5 Million. Sales revenues increased 67.5% reaching RUB 1.487 Billion (EUR 35 Million). Traffic volumes increased by 5% with 869,000 TEUs carried, 522,000 TEUs in domestic transport and 347,000 in international transport.
by Pamela Luică
Share on:
