Alrosa asset detox

Alrosa sells non-core assets expecting to attract funds on IPO
Alrosa, world biggest diamond producer, is to get rid of non-core assets to increase the company's attractiveness ahead of its IPO.

­The company is mulling the sale of its gas and insurance businesses as well as a considerable amount of housing in the Yakutia region of Russia.

Alrosa has come to an agreement with the regional government over Alrosa-Gas, which it wholly owns after a deal with Sakhatransneftegaz in 2007. 

A similar fate awaits the insurance company JSC Alrosa SC, where Alrosa owns 99.3%. It will be reorganized and merged with the state owned “Siberian Sterkh”.

However, the most important economic effect is expected after reorganization of housing assets. These include 310 thousand square metres of residential property occupied by 26 dormitories, 29 kinder gartens, 19 boiler-houses and hundreds of kilometers of heating mains. According to company financial report around 1.25 billion roubles had to be spent on local infrastructure in the last financial year.

The company has refused to announce the buyer for its infrastructural assets; however, experts assume that Alrosa will not receive cash for its assets, Sergei Karabaev, associate partner in “Karabaev and partners”, says “Alrosa could be offered stakes in other state owned companies in the sale to the Yakutia government and at some point this will reduce expenditure

Alrosa plans to hold  IPO in 2012-2013 depending on the market conditions and state privatization deal related to 10% stake sale in the company.