Sale of the century, take two

25 October 2010 By Jason Bush

A plan to sell some $60billionworth of state asset looks impressive, but excitement may be running ahead of the likely benefits. The state will continue to control large companies, and markets’ appetite is far from certain. Investors should wait for details before they dip in.

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Igor Shuvalov, a Russian deputy prime minister, on Oct. 20 gave details about Russia's upcoming privatisation plans. He said that the state could receive 1.8 trillion roubles ($59 billion) over five years from the sale of stakes in 900 governmentowned companies. The privatisation plans would include around 15 percent of Rosneft, nearly 8 percent of RusHydro and 25 percent of rail monopoly Russian Railways, but would not include oil pipeline company Transneft. He said that the state planned to reduce its shareholding in state savings bank Sberbank to a controlling one by 2014.

The sale of up to 35 percent of bank VTB would take place in three stages by 2012, beginning with the sale of 10 percent that might be completed before the end of this year. Shuvalov said that the state would "discuss the possibility" of selling below a controlling 50 percent stake within three years. VTB has confirmed that it is presently in talks to sell 10 percent to a pool of investors led by U.S. private equity firm TPG.

Russian Prime Minister Vladimir Putin discussed the privatisation plan with his Cabinet on Oct. 21, but no final decision was taken. Putin's spokesman said that the plan required "further work". At a meeting with foreign investors on Oct. 18, Putin emphasised Russia's commitment to privatise, saying "rather attractive state stakes will be put up for sale".

Reuters story: Russia mulls $59 bln selloff, gives no timeline

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