MOSCOW, 1 February. Russia in the global crisis and the impact of sanctions may not find investors willing to join a big state-owned assets. Therefore, privatization must be careful to use non-standard tools to conduct it efficiently and with maximum benefit for the state, warn experts.
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The President of Russia Vladimir Putin will hold on Monday meeting on privatization. Accelerating the sale of stakes in large companies on big press conference Putin said at the end of 2015. According to the head of the state, privatization has solved two problems: the first is fiscal-related revenues, the second, more important – change of ownership structure to increase the efficiency of work. The Russian authorities do not exclude the sale of shares of such companies, as “Rosneft”, “Aeroflot”, “RusHydro”.
“From the point of view of the strategy of this process here I think the logical position (the first Deputy Prime Minister Igor) Shuvalov, who said that privatization needed need a clear, high-quality and is not held “at any price”, – said independent Director Alexey Germanovich.
A weak stimulus
Finance Minister Anton Siluanov urged “to take inventory” and to receive from privatization in the next two years 1 trillion.
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Experts say that now because of falling oil prices and the threat of rising Federal budget deficit was a “Mercantile” interest in rapid privatization of large assets.
“But if the price rises, this incentive can be weakened significantly. The uncertainty of whether money budget, create the ambiguity of how urgent and necessary is the privatization of the here and now”, – says head of Department “Stock markets and financial engineering” FBS Ane Konstantin Korishchenko.
“If the goal is just getting this trillion, nothing will change. He will need it will pay the salaries. Because the liabilities will grow again,” agrees managing partner of advocates Bureau “a right Line” Andrey Novakovsky.
How can there be money
The main question that arises in the sale of major assets, where would the investor who is now ready to invest in Russian companies, though attractive, experts say.
“One trillion in today’s money – is 12-13 billion dollars. If you look at the current capitalization of the largest companies, there are tens of billions of dollars, that is the real figure. Another question is where the money can come?”, says Korishchenko.
A local investor in Russia, is willing to make such large purchases, missing, explains Nowakowski. Experts agree in opinion that could be considered resources of the pension market, however, they are not so great as to give the state 1 trillion rubles.
“You can apply very popular in Europe and other countries such a tool of privatization of the exchange and/or convertible bonds. Historically, it is the main instrument of privatization in socially responsible countries such as Switzerland and Germany. Then the money the state will receive today, but the growth in share value over 3-5 years, investors and the state will share. Most could state,” offers Korishchenko.
Foreigners don’t go
The situation with sanctions that prevent large numbers of foreigners to participate in the Russian capital market, including privatization, Korishchenko said. “We can say with some degree of hope to say that there are investors in Asia and the middle East, even in Latin America, which could amount comparable to the Russian market to bear,” he said.
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However, the question is: the activity of foreign investors and hampers the global crisis associated with the oil prices, the slowdown of the Chinese economy. “It actually blocks investors, irrespective of their source of money, from entering the market of developing countries, transition in risky assets,” said Korishchenko.
According to Korishchenko, on the basis of these features, you can use a number of methods of privatization. “Among the privatized companies is an industry leader not only in Russia but in the world. For example, “Aeroflot” and “SCF”. On the other hand, it is difficult to find specialized strategist without conflict of interest or risk of deterioration management. In such cases it is logical to sell controlling stakes in the stock exchanges and to preserve the strategy and handling of the blocking packages to sell on credit management (the so-called MBO). State-owned companies in Russia have not been privatized, but the idea is worthy of discussion,” – said the expert.
Cautious investors may be caused by the fact that the state in the current environment is not interested to give a controlling stake in such companies as Rosneft, Sberbank or VTB. On the market are less significant share, just no buyers. “From the real buyers could be the only China”, – said Nowakowski.
“But for this sale we will pay very dearly – the loss of control over the infrastructure, the transmission in the development of natural resources on unprofitable conditions – these obligations upon demand of the Chinese will be fixed before the deal of privatization in the form of intergovernmental agreements”, – said the expert.
Management efficiency
According to Nowakowski, the effective privatisation of the companies that generate money for the budget in the form of dividends and taxes, could not be in a hurry. This, primarily, refers to “Rosneft”.
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To increase the efficiency of a number of companies allowed policy of the last several years. “A clear signal, a clear political will to privatize was not, therefore, focused on improving efficiency,” said Nowakowski.
“And here we must note the efforts of the Federal property management Agency. If we talk about the largest companies in their relations over the past two years work has been done to improve corporate governance,” – said Siluanov. By the end of 2015 in the form of income from dividends on shares owned by the Russian Federation, the Federal budget received about 260 billion rubles. Implemented the corporate governance Code, many provisions of which were binding rules of the listing rules on the stock exchange, significantly increased the representation of professional independent Directors. Common, in fact mandatory for state-owned companies has been the payment of not less than 25% of net profit as dividends, like an expert.
The positive dynamics of corporate governance in state-owned companies is confirmed by results of annual research conducted by the Russian Institute of Directors (rid). However, as noted by Deputy Director – head of Expert centre of RIED Catherine Nikitchanova, studies show a common problem of all companies, including with state participation, – lack of comprehensiveness in the implementation of individual standards.
So, by the end of 2014, only 51% of state-owned companies have a special internal document regulating their dividend policy, and only 27% of state-owned companies fix internal documents reflecting a dividend policy, the requirement to set the size of dividends based on net profit, as determined under IFRS. But disclose financial statements according to international standards 57% of state-owned companies.
“The government regularly uses the results of the study for the development of corporate governance practices in state-owned companies,” says Nikitchanova. Now developed a road map for corporate governance for the coming period. It aims to provide an integrated approach to the implementation of advanced standards of corporate governance in state-owned companies.
