FACTBOX-Russia’s $32 billion state asset sale

MOSCOW, Nov 17 (BestGrowthStock) – Russia has approved a plan to sell
around 1 trillion roubles ($31.92 billion) in state assets
including stakes in its two biggest banks and main oil producer,
the government said on Wednesday.

Here are details of the biggest and most attractive
companies. The size of the stake to be sold is in brackets:

VTB (VTBR.MM: ) (10 percent)

Russia will kick off its privatisation plan by selling a 10
percent stake in second-biggest bank VTB to U.S. private equity
group TPG [TPG.UL] for at least $3 billion.

Bank of America Merrill Lynch (BAC.N: ) has been appointed to
handle the sale, which should complete some time next year.

Shares in VTB, currently 85.5 percent controlled by the
government, have risen more than 50 percent this year to value
the company at $35.7 billion.

Its investment banking arm VTB Capital dominates the Moscow
deal-making scene.

SBERBANK (SBER03.MM: ) (9 percent)

Russia’s biggest lender Sberbank has confirmed it will sell
9 percent of its shares — including 3-4 percent in a public
offer on the stockmarket — in a deal that could raise $6.4
billion at current prices.

The $70 billion company, 60 percent owned by Russia’s
central bank, has around 20,000 branches and holds roughly half
of all Russia’s personal savings.

It managed to avoid making a loss during the financial
crisis and is headed by German Gref — a pioneer of economic
reforms under Vladimir Putin’s Presidency of 2000-2008.

SOVCOMFLOT (Unlisted, 25 percent)

Russia’s economic ministry said earlier this month an IPO of
a 25 percent stake in the state-owned shipping giant will take
place next year.

Russia’s largest shipping group specialises in oil transport
and has 144 vessels.

Its 2009 net profit nearly halved to $217 million, while
revenue fell 25 percent to $1.2 billion.

RUSSIAN RAILWAYS (Unlisted, 25 percent)

Russia will cede full control of its vast rail network when
it sells 25 percent of RZhD (Russian Railways).

The company, which controls the world famous Trans-Siberian
Railway and transports Russia’s wealth of natural resources to
the rest of the world, needs cash to improve aging Soviet
infrastructure such as tracks and stations.

It raised $400 million via an initial public offering (IPO)
of cargo unit TransContainer (TRCNq.L: ) earlier this month and
may have generated as much as $4.8 billion by the time the
divestment plan is completed. [ID:nLDE6A80K8]

AEROFLOT (AFLT.MM: ) (minority stake est. 12 pct)

Russia’s Finance Minister Alexei Kudrin said last month a
minority stake in flagship airline Aeroflot (AFLT.MM: ) could be
sold in 2011.

The government owns just over 50 percent of the carrier and
is expected to retain control at least until 2015, suggesting
that an 11.8 percent stake owned by the central bank could be up
for grabs.

Aeroflot remained in the black through the financial crisis,
announcing a trebling of net profit to $86 million in 2009. Its
shares are up 43 percent in the year to date, valuing the
company at $2.7 billion.

ROSNEFT (ROSN.MM: ) (15 percent)

Russia’s largest oil producer Rosneft is 75 percent owned by
the Russian government but the state could offload a 15 percent
stake between 2011 and 2013.

The company, which supplies about a fifth of Russia’s oil,
saw third-quarter earnings soar to $2.57 billion from $1.16
billion the previous year on higher production rates.

Company directors have said a stake sale may be difficult
without a major reform of Russia’s oil taxation system.

The company’s free float is just 15 percent. The rest of the
stock is held as treasury shares, which it bought back after
raising $10.6 billion in an IPO in 2006. Rosneft shares are down
16 percent in the year to date.

FSK (FEES.MM: ) (c.28 percent)

State-controlled Federal Grid Company, or FSK, posted first-
half profit up 60 percent at 12.6 billion roubles after slumping
to an overall loss in 2009.

Analysts say it remains vulnerable to ongoing electricity
reforms as dictated by the Russian government.

FSK, nearly 80 percent controlled by the government, also
owns part of electricity generator OGK-1 (OGK.MM: ).

The shares are up 14 percent this year, valuing the group at
about $14.4 billion.

RUSHYDRO (HYDR.MM: ) (c.9 percent)*

Russia’s largest hydroelectric power producer is 60.4
percent owned by the government and is also a part-owner of
OGK-1.

In July it raised 9.2 billion roubles by selling new stock
to shareholders to help fund repairs after a dam flood.

Its shares are up 37 percent this year, valuing the company
at $14.8 billion.

AIZhK (Unlisted, c. 49 percent)

The state-owned mortgage agency charged with the development
of the home loan market is Russia’s equivalent of the Ginnie Mae
National Mortgage Association in the United States.

ROSSELKHOZBANK (Unlisted, c. 49 percent)

The farm industry lender is one of the top 5 Russian banks
by assets. It has total assets of around 900 billion roubles and
received massive government support during the crisis.

Dmitry Patrushev, the 32-year-old son of Kremlin Security
Council chief Nikolai Patrushev — a close ally of Prime
Minister Vladimir Putin — is RSHB’s chief executive.

* Based on original draft plan published by Reuters in July

(Compiled by John Bowker and Conor Humphries; Editing by Erica
Billingham)
($1 = 31.33 roubles)

FACTBOX-Russia’s $32 billion state asset sale