Transactions on the privatization of public property have to hold in extremely adverse conditions, but urgent one, said in early February the Minister of economic development Alexei Ulyukayev. “There is nowhere else to wait, he explained. The budget situation is critical, the overall turbulence of the financial markets gives no grounds for us to expect a rebound, recovery”.
Formally, the budget for 2016 on revenues from privatization laid a total of 33.2 billion rubles In this amount was taken into account the income from the sale of only one major asset — Sovcomflot (25% minus one share). At the time of budgeting decisions on the sale of the government stake in other large companies was not. But in January, Ulyukayev said that the government expects to increase revenues from privatization to 800 billion rubles is about 5% of the expenditure budget for 2016, or almost 30% of the deficit. So much for privatization, the state never made. While the record is 2012, when the Federal budget from the sale of its assets received 206.9 billion rubles, of which almost 160 billion rubles accounted for one transaction — the sale of a 7.58% stake in Sberbank.
The plan for this year sell 19.5% of Rosneft shares, a 50.1% Bashneft, 10,9% — VTB and ALROSA. At the current capitalization of their total cost is slightly more than 1 trillion rubles.
The Ministry has already selected vendors for each of the assets, but most likely, this year the state will only be able to sell Bashneft, say two sources — the government official and employee of the Agency. “There is an understanding that everything is done just for the sake of a deal — the privatization of “Bashneft”, — said one of the interlocutors . — On other assets so far there are no buyers or very low cost”. Another official added that the privatization impeded the sanctions — European and American investors are afraid to invest in Russia.
There are other restrictions. In early February, at a meeting on privatization, President Vladimir Putin said that potential buyers must be registered in Russian jurisdiction, “the gray scheme and the withdrawal of assets to offshore zones” is invalid. In addition, the President demanded to pay more attention to “quality of investors”: the transfer of shares from the state to private investors is only possible if the last clear development plans and money. “It is necessary that prospective investors and purchasers seek their own resources or loans, but not from state banks. There’s a little,” — said Putin.
As can be seen in the privatization of assets of RAO UES and Yukos, the need for the participation of companies from Russian jurisdiction can be solved by establishing structures like “Baykalfinansgrupp”, recalls chief economist “PF the Capital” Evgenie Nadorshin. According to him, the sanctions not only limit the ability of Russian companies to attract financing on the Western markets, but also dramatically reduce cruzaban investors interested in investing in Russian assets. Since the sanctions, American and European investors have lost interest in the Russian assets, even highly liquid and much cheaper, agree another financial adviser, who requested anonymity.
Property without the chief
Formally, for privatization, the Agency is responsible. April 12, Prime Minister Dmitry Medvedev dismissed the head of the Agency Olga Dergunova. The reason was the conflict with her immediate superior, the Minister of economic development Alexei Ulyukayev. The Minister supported both Medvedev and first Deputy Prime Minister Igor Shuvalov. Dergunova resigned, despite the support of President Vladimir Putin, said two Federal officials.
The new head of the Federal Agency is still not appointed, but the Federal official anticipates that this will happen in the near future. Most likely, it will be the former Deputy Dergunova in the Federal property management Agency, Director, Federal and regional programs, Norilsk Nickel Dmitry Pristanskov. Other candidates — first Deputy head of VEB Pyotr Fradkov, first Deputy Minister of industry and trade Gleb Nikitin. The official of the government says that the absence of the head of Rosimushchestvo has not yet affected the preparation for privatization.
The battle for Bashneft
The real deal this year — the privatization of “Bashneft” according to two officials dealing with state property. 50,08% of the company belong to Rosimushchestvu, 25% of the authorities of Bashkiria.
The most likely candidate for the purchase of Bashneft — LUKOIL, claim the interviewees . One of them says that the company’s President Vagit Alekperov was sent to the government a proposal to purchase 75% of shares of “Bashneft” at a premium to the market. With this configuration of the transaction “we believe that the premium can be up to 30%,” says the official. Alekperov very active and personally met with all the officials that affect the decision to privatize, he says.
However, with high probability LUKOIL will be limited to buying only the Federal package. Bashkiria to part with “Bashneft” is not going to, said in early April, the President of the Republic Rustem Khamitov.
This week it became clear that LUKOIL has a rival Independent oil and gas company (NOC) Eduard Hudaynatova, former President of “Rosneft”, which the media called the person from the environment of its current head Igor Sechin. According to “Interfax”, at the end of March Khudainatov has sent a letter to Putin in which he informed about the readiness of the NOCS to participate in the privatization of “Bashneft” and suggested that the privatization of the requirement to the buyer company on the supply and refining companies in the far East. The Khudainatov has already confirmed this information.
It is unlikely the government would agree to include in the privatization of such restrictions because they reduce competition, and hence the cost of an asset, says a Federal official. Offer Khudainatov conditions will be struck from the privatization of all the potential candidates except for NOC and Rosneft, which have factories in the far East, says a senior analyst of Sberbank CIB Valery Nesterov. In addition, it is unclear how the NCC will take the funds for such a purchase, said a senior analyst “URALSIB capital” Alexei Kokin. Net debt Alliance Oil (the largest asset NOC) at the end of September 2015 was $1.8 billion, debt to EBITDA ratio of 4.9. The representative of the NOC did not answer the call . NOC can refer to competition, but its financial resources are limited, agrees the analyst of “Renaissance Capital” Ildar Davletshin. The majority of the company’s assets is at an early stage of development and requires significant investment, he explains.
50.1% of “Bashneft” on Thursday, cost on the Moscow stock exchange of 240 billion rubles, or about $3.3 billion LUKOIL will not overpay for Bashneft, the value of the shares which are at their peak, warned in early April Vice-President of LUKOIL Leonid Fedun. Ulyukayev said that Alekperov will not be able to bring down the price and sale of state block of shares in Bashneft to a strategic investor is possible only at a premium to the market. Specific suggestions about how sales price and potential buyers, “VTB Capital”, a Bank appointed consultant shall prepare before the end of may.
Who else is interested in “Bashneft”
Forbes reported that the privatization of “Bashneft” is interested in the business Hotine, “Vedomosti” told about the possible transfer of the state shareholding in Bashneft for ten years the little-known company “Tatneftegaz”. Both options at the moment are not the main, said two Federal officials. One of them knows that when “Bashneft” became the property, buying it was interested in Roman Abramovich. Friend of Abramovich denies this and his spokesman has not commented.
Sechin and Kostin against
To sell 19.5% of Rosneft shares and 10.9% of VTB to the government, it seems, will have to convince the management of the company and the Bank.
“How to raise the effectiveness of this sale? I think if you reflect on the expert level, this is a very simple question: it is necessary to wait, when the price of oil will be $100” — so the President of “Rosneft” Igor Sechin commented February 10, possible the privatization of 19.5% stake in the company. Then a barrel of Brent crude oil cost $30,9. In two months, oil has risen by almost half, to $45,8, but the average price this year, according to the forecast of Ministry of economic development, will not exceed $40 per barrel.
The government plans to sell 19.5% of Rosneft in the second half and expects to receive about 650 billion rubles., said in an interview with CNBC Finance Minister Anton Siluanov. As of 15:30 GMT Tuesday, 19 April, this share was worth on the stock exchange 649,34 billion rubles.
VTB President Andrei Kostin said in February that selling almost 11% of the Bank’s shares this year extremely difficult task. The motivation for the investor can be a growth stock, and this in terms of sanctions and recession in the Russian economy is unlikely. “If privatization will not, I do terrible for himself as a Manager do not see”, — said Kostin. Day 19 April 10,9% VTB cost on the Moscow stock exchange 103.9 billion rubles.
Qualifying transaction on privatization of “Rosneft” and VTB unites the lack of buyers who would officially informed the Russian government about their interest, tell two Federal officials. According to them, in both cases, buyers looking for the selling management companies.
Two weeks ago, Medvedev had a closed meeting about the privatisation, which Mr Sechin spoke about the results of their trips to India, China and Japan and possible candidates for participation in the privatization of the company, says a Federal official. “But iron arrangements with anyone there,” he said. According to him, priority of privatization of “Rosneft” sale of 19.5% two or three buyers.
On Thursday the interest to privatization of “Rosneft” stated the first Vice-President of the Chinese CNPC Wang Juncai. According to him, it is possible to share, which can be purchased by CNPC, will be discussed at the level of Prime Ministers of Russia and China. The Chinese company expressed interest in the privatization of Rosneft in 2014, when the government first discussed the sale of 19.5% of the company, similar to the Federal official. The Chinese definitely do not sell everything to 19.5% — neither the government, nor of “Rosneft” does not need such a large shareholder, says the source . “If the deal goes through, buyers will be few and CNPC can get up to 5-7%”, he concludes.
Sale of shares of “Rosneft” hardly will take place before the end of the year, skeptical other Federal official: “to close it [this term], must be specific buyers and should be a huge paperwork, and you don’t”. Need customers, but still not even selected an investment consultant, said the source . Finally, the dollar share price is almost twice lower than in 2013, when BP acquired for 5.66% of Rosneft shares, says a Federal official.
Unlikely, according to both officials, and the privatization of VTB. While the Bank is under sectoral sanctions, to sell its shares of the relevant investors will fail, says one of the interlocutors . The representative of VTB said that the privatization of the Bank in current market conditions is difficult but feasible task. According to him, the main investors are Russian pension funds and private companies.
Diamonds on the exchange
10.9% of ALROSA the government plans to sell on the Moscow exchange, said two Federal officials. It is more profitable than selling to a strategic investor, confirmed on 19 April, Deputy Finance Minister Alexei Moiseyev: “If a decision on privatization of ALROSA, its shares will be placed on the Moscow exchange. We believe that we as a seller will receive good service.”
As of 18:00 GMT Thursday to 10.9% of the company was worth on the stock exchange of almost 60 billion rubles.
The Ministry of economic development held several meetings with the largest private pension funds and discussed the possibility of their participation in the privatization, said Deputy Minister of economic development Nikolay Podguzov at a recent forum Exchange. According to him, the APF application with the high demand for shares can be satisfied completely in contrast to applications of other categories of investors.
As previously wrote the newspaper “Vedomosti”, in March the Ministry of economic development has sent the largest private foundations letter of offer “before 1 April,” to provide information “on interest to invest” savings and corporate pensions “in the assets of Russian companies during their privatization”, and called “acceptable conditions and settings” to participate in privatisation. Their interest in participating has confirmed the “Leader” — one of the largest management companies of pension funds. Leadership “the Leader” has offered to create a consortium of investors with participation of large pension funds, wrote the publication with reference to sources in the financial-economic bloc of the government.
Assessment of PSB, means that SPC may direct the purchase of securities, amount to about 350 billion rubles. But the main problem analysts say the risk that the funds can afford. “Pension funds generally adhere to conservative investment policy, and this increased risk will seriously increase the volatility of their yields,” says chief analyst of PSB Igor Nuzhdin.
“Participation in the privatization of interest to us. It’s high-quality assets. But it all depends on conditions, and we have not announced”, — said a top Manager of one of the largest non-state pension funds. “At the meeting with representatives of the Ministry of economic development we have discussed globally, is it possible our participation in privatization, says the head of another NPF. — We went away to think. A lot depends on which pension system will be further”.