M&A state style

So once again, instead of privatising a 25 per cent interest in Novorossiysk Commercial Sea Port, the government is proposing that the state oversee the interest through another  state-controlled firm. According to Kommersant (6 February 2012), Deputy Prime Minister Igor Sechin has proposed in a letter to Prime Minister Vladimir Putin that the 25 per cent interest be sold directly from the Federal Property Management Committee and Russian Railways to Rosneft.

Then in its capacity as state firm, the oil producer will participate in management of the port.

LUKOIL expanding in Qurna interest

The Iraqi government has approved plans by LUKOIL to acquire Statoil’s interest in the West Qurna-2 oil field Iraq. As a result of the deal, the Russian oil producer will be able to consolidate a 75 per cent interest.

It is possible that LUKOIL may sell on this interest to another foreign partner. It remains unclear why Statoil decided to pull out

VTB Capital to invest in agriculture

Jason Silm, head of agriculture fund management at VTB Capital, has publicised plans by the state-controlled bank to establish an agricultural fund with up to USD 1 billion, which will acquire controlling interests in small companies in the grain and oilseed sector.

An article in Kommersant dated 2 February 2012 compares the size of the agribusiness sector in various countries from the perspective of prices per hectare of agricultural land and wheat crops.

Infra Engineering seeking external contractor

According to Kommersant (2 February 2012) in an article entitled  Infra looking for an investor, Rostelecom’s main contractor Infra Engineering may sell a 25 per cent interest to a strategic investor. As part of the plans for change, it has been rumoured that the company’s president Sergei Ogorodnov could be replaced by the former head of Rostelecom’s Siberian branch Ivan Dadykin.

Possible buyers include Hochtief and Gazprombank.

In 2010 Infra Engineering secured contracts worth RUB 9.3 billion from Svyazinvest subsidiaries that have been consolidated in Rostelecom.

Sergei Generalov sharing Vladivostok business

According to Kommersant (1 February 2012), Sergei Generalov’s Fesco Group had to agree to a number of concessions when consolidating 95 per cent of the shares of Vladivostok Commercial Sea Port. In order to receive half of this interest, Generalov agreed to hand over former co-owners of the port, headed by Vyacheslav Pertsev, control of the port’s service business.

Vladimir Lelekov describes Russia’s railway market

In an interview with Kommersant on 1 February 2012, entitled “We hope that common sense will prevail“, Brunswick Rail CEO and managing partner Vladimir Lelekov explains why the company decided to expand its business interests from operational leasing of rolling stock after acquiring the operator Proftrans, which works with Magnitogorsk Iron & Steel Works (MMK), and almost doubling its fleet of rail cars.

He also comments on the profitability of the rail car leasing business at present, the monopoly held by Russian Railways in the sector and the steps that need to be taken.

VTB Capital booking on-line

According to an article in Kommersant dated 10 February 2012 entitled VTB Capital secures a booking, VTB Capital has paid USD 10 million for a 30 per cent interest in Russian tourist on-line hotel accommodation service provider oktogo.ru, which is co-owned by the funds Mangrove Capital Partners, ABRT and Ventech.

According to the article, the segment for on-line bookings in Russia is increasing 70 per cent a year and could be worth USD 3 billion by 2015.

Transtelecom getting more connected

According to Kommersant on 13 February 2012 in an article entitled Transtelecom connecting with SPARK, the telecoms operator owned by Russian Railways is acquiring regional Internet provider Electro-com, which offers services under the SPARK brand for an estimated RUB 2.35 billion.

Analysts believe that the price is excessive, equivalent to an EV/EBITDA multiple of over eight.

AAR consortium taking control

According to a report in Kommersant on 13 February 2012 entitled Mikhail Fridman given two years, the Russian shareholders in TNK-BP, represented by the AAR Consortium, are consolidating their control of the joint venture, with Fridman assuming the reins for another two years.

Meanwhile the litigation between the two companies rumbles on. Another warning to foreign companies to secure at least 51 per cent of any joint venture in order retain some semblance of influence.

 

Magnitogorsk Iron & Steel Works selling coal interest

Magnitogorsk Iron& Steel Works has been holding negotiations with a foreign company on the sale of a 50 percent interest in coal miner Kazankovskaya that it owns on a parity basis with Evraz Group

Analysts are surprised at the decision. They are also surprised that its partner Evraz Group has not sought to buy the interest.