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M&A February 2012

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.

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.

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.

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.

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.