The government expects to raise a total of 1 trillion rubles ($32 billion) from selling stakes in 10 state assets by 2013, Economic Development Minister Elvira Nabiullina said Wednesday.
“The government has approved the project of the forecast plan for privatization in 2011-2013,” she told reporters after the cabinet meeting.
“The income from selling shares of the 10 largest companies will account for about 1 trillion rubles in 2011 to 2013,” Nabiullina said.
The government is ready to sell 7.97 percent minus one share of RusHydro and 4.11 percent minus one share of the Federal Grid Company, while the stakes to be sold in Sberbank and VTB will be 7.58 percent minus one share and 35.5 percent minus one share, respectively.
A 100 percent stake in the United Grain Company will be sold by 2012.
Nabiullina said the government plans to sell a stake of 50 percent minus one share in Sovkomflot and Rosagrolizing, 25 percent minus one share in Rosneft, Russian Railways and Rosselkhozbank.
The Rosselkhozbank stake might not be sold until 2015, Nabiullina said.
Another eight midsized companies, including Apetit and S7, whose state share packages are valued at 500 million rubles or more, will be sold next year, the minister said.
First Deputy Prime Minister Igor Shuvalov said last month that the government expected to raise a total of 1.8 trillion rubles by 2015 from privatizations of some 900 companies.
The details of asset sales for 2013-15 still need to be finalized.
The ministry plans to create a public database that would provide information on privatization of the state assets to make the process more transparent, Nabiullina said.
The database would include a list of government-owned companies and details of their operations, as well as information on the privatization process. Information on leased federal property will also be accessible, she said.
Meanwhile, Roman Goryunov, chief executive of the RTS stock exchange, expressed concern on Wednesday that the government was considering a London listing of shares of the companies to be privatized.
“We have heard that the Economic Development Ministry planned to list [the companies' shares] in London. If this happens, we can forget about [Moscow as an] international financial center,” he told a conference in Moscow, Interfax reported.
Analysts said there was no reason to worry because the lion’s share of assets would likely be sold domestically.
“Of course, part of the assets may be sold in an IPO on foreign stock exchanges, but I think most of the assets will be sold in Russia,” said Yaroslav Lissovolik, chief economist at Deutsche Bank Russia.
Privatization itself is positive for Russia's investment climate, he told The Moscow Times, but the majority of listings should be made domestically to “give a new impulse” to Moscow’s aspiration to become a financial center.
Privatisation plan gets green light despite rumours
November 18, 2010
The Russian government has given the green light to a privatization plan of federal property in 2011-2013, paving the way for a sell-off which could yield over 1 trillion roubles ($33bn) for the state over the next three years, Ria Novosti reports.
Economic Development Minister Elvira Nabiullina said on November 17 that the government hopes to get the majority of privatization revenue from the sale of the top 10 companies, the paper said. All decisions on the sale of these companies have been confirmed, Nabiullina said.
The announcement contradicts reports in the Russian press this week that the ministry was pushing to scrap plans to sell stakes in the country's largest companies. Earlier this year, finance minister Alexei Kudrin said the government may need to force the privatisation plan past vested interest in various state companies.
A number of executives have called for delays or cancellations of privatization plans for their companies. However, only Transneft CEO Nikolai Tokarev kicked up such a fuss that he managed to get his company off the list altogether - although given the strategic nature of Russia's oil pipeline monopolist, it wasn't the toughest task in the world.
The sale of the government’s stakes top 10 large-cap companies will be governed by a separate procedure, with each transaction subject to special government approval. Some of those stakes will be sold through 2015 (rather than 2013). Moreover, Minister for Economic Development Elvira Nabiullina suggested November 17 that in some of the transactions, the primary sale of new shares would be part of the privatisation sale.
"The approval of the privatisation program cements the momentum behind what is a major new initiative from the current administration this year," write VTB analysts in a note. "The primary component hinted at by Nabiullina indicates that the privatisation is seen by the government not solely as an exercise in funding the fiscal gap, but as a capital raising and structural reform initiative."
Separately, Uralsib says the flood of new state shares onto the Russian stock market could dampen investor appetite for private company listings. "If market conditions and Russia appetite remain as tough as they have been this year, and the state pushes ahead with its planned program, then private company issuance will remain a struggle unless those issues are priced much more keenly than they have been in the past."
According to Ria Novosti, the list of privatisations includes the sale of stakes of 25% minus one share in oil major Rosneft and and Russian Agricultural Bank and the country's rail monopoly Russian Railways. Meanwhile Rosagroleasing agricultural leasing company and the country's largest shipping company Sovcomflot will sell off stakes of (50% minus one share), with 100% sale of the United Grain Company.
Smaller stakes will be sold off in RusHydro hydropower generator (7.97% minus one share), the Federal Grid Company of Unified Energy System (4.11% minus one share), Russia's top bank Sberbank (7.58% minus one share), and the country's second largest lender VTB bank (35.5% minus one share).
Uralsib noted that there was no mention of the state’s 20% equity stake in Novorossiisk Seaport, which had previously been mentioned as a sale candidate for 2011.
Investors, concerned about the effect of the recent deal that saw Transneft and its investment partner take a large slice of the port, had considered the possible privatization a comfort factor. Its exclusion may again raise concerns and affect the share price, at least for now.