Ben Aris in Moscow -
Apparently weary of waiting for international markets to pick up, the Kremlin is pushing to get Russia's privatisation drive started at home. Announcing a raft of details on April 2 and 3, Moscow confirmed progress on a couple of sales. However, resistance remains in some quarters.
The state originally planned to sell RUB300bn ($10bn) in state assets this year, but at the end of March tripled that already ambitious goal by adding another RUB800bn to the list of companies set to increase private ownership.
First out of the gate is almost certain to be the country's second largest bank VTB, which on April 2 reiterated plans to hold a RUB100bn ($3.3bn) secondary public offering of a 10% stake on the Moscow Exchange this year. The precise timing will depend on market conditions, CEO Andrei Kostin said, noting that the current situation "is bad". The government has said it plans to offload its entire 75.5% stake in VTB by 2016.
Progress is also being made towards selling a stake in diamond monopoly Alrosa. The government has approved Goldman Sachs as the sole organizer of an initial 2013 deal to sell a 7% stake, it announced on April 3. Overall, a 14% stake in Alrosa is set for privatisation this year, with the other 7% stake to come from the 32% holding of the government of the republic of Sakha. The federal government current owns a controlling stake of 51% and Sakha municipalities hold 8%, with the remainder free float.
"This is a standard procedure. The government chooses the agent to determine the conditions of the future transaction, search buyers, and set the date and terms of the sale," a spokesman for the Federal Agency for State Property Management told Prime.
However, some other big names may be moving further from going under the gavel, with resistance - particularly amongst management - to the sell off continuing. A 5% stake in Russian Railways is planned to be sold in 2013, but Yaroslav Mandron, the economic development ministry's deputy department director, said on April 3 that the sale could be postponed to next year.
"Our schedule comprises privatisation in 2013, this is why we will get everything ready in that term. I think, there are some risks that we will not be able to do it because we need to make drastic changes, including ones to the current legislation," he said. The first step in privatising the national rail operator is likely to see the stake sold to either the state pension fund or National Wealth Fund, however a larger 20% could be offered via IPO in 2015-2016.
There is also uncertainty over the privatisation of a stake in Rostelecom. The economy ministry says it wants to put shares in the long distance telecoms company on the block in 2013, but faces a challenge from within the government.
"We believe that we could privatize (Rostelecom) this year if a corresponding decision is supported," Economy Minister Andrei Belousov said on April 2. However, there is no clear agreement on the date, and Communications and Mass Media Minister Nikolai Nikiforov said earlier this year that the stake would be sold in 2015, after the company completes a merger with state-run telecommunications holding Svyazinvest.
While flag carrier Aeroflot is also being groomed for sale this year, plans to sell off Moscow's main international airport - Sheremetyevo - have been delayed according to Belousov. "I never mentioned that we would privatize Sheremetyevo in 2013. Aeroflot, by contrast, is ready," the minister said.
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