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Stakes on Sale. Finally.
October 26, 2012 23:52

Investors saw a glimmer of hope on Thursday to improve the much-maligned business environment in Russia as the government signed the privatization plan for the nation's biggest state companies in a bid to draw private capital.

The move has been mulled for some time but investors have got weary by now with empty promises, so a specific schedule looks to be sending a positive signal to the markets.

The stated goals include not only raking in foreign money but also making the bulky giants more transparent, flexible and competitive, bringing in international managers on its board and introducing the world's best practices in corporate governance.

Economic Development minister Andrey Belousov said the government could raise a total of 260 billion-270 billion roubles in at least eight privatization deals next year. Although the expected revenue is hardly critical to the budget, it could still help to balance out the capital in- and outflow.

Among the biggest sell-offs listed in the 2013 blueprint signed by prime-minister Dmitry Medvedev, are Rosneft's 6 percent stake, and a 10-25.5 percent in VTB bank, the IPO of 7-14 percent in diamond monopoly Alrosa and the IPO of the Sovcomflot shipping group.

Of course, in the light of Rosneft's acquisition of TNK-BP, many have questioned whether its SPO makes sense in 2013 when the markets are likely to stay volatile amid the ongoing recession.

Also, Rosneft is expected to hand over some of its shares to BP as part of the the deal to purchase TNK-BP. No-one is the government has been able to clarify whether the upcoming transfer of the stake is considered to fit in with the privatization plans or is it a separate story.

If the second option is true, we’ll more fierce resistance by Rosneft’s chief Igor Sechin, who would hardly like the idea of giving away underestimated assets so soon.

The company’s IPO took place in 2008 and brought Rosneft some $10 billion.

If you want to know more about specific companies that will be listed on stock exchanges or more on the privatization plans, ask Russia-IC. 

More news from Russia-IC on the question can be found here:

Below is a video to help you with understanding the motives behind the privatization thrust.

Author: Mikhail Vesely

Tags: privatization Russian business Rosneft Alrosa  

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