Government moves further on privatizations
RT: If this privatization programme takes place, is it going to radically change the financial landscape in Russia?
VT: “If it takes place in full, yes. Because we are talking about a significant number of companies, both in numbers and in their importance to the economy, although one thing that perhaps needs mentioning here is that the government is not planning to sell all of its stakes in the major companies. It is going to reduce stakes – perhaps in certain areas they could be reduced below the controlling stake, but nevertheless the government will still possess a quite significant share of these companies. But nevertheless it is, I think, the largest privatization programme in Russia since the early 90s.”
RT: The Finance Minister says he expects demand to outstrip supply. Do you think there will be strong demand for these shares?
VT: “For some shares, yes. There are some very well known names, named yesterday by Shuvalov, including Rosneft, Aeroflotm VTB, Sberbank – these are companies that are already traded and, of curse, some investors could perhaps have some, long term investors, could show quite a bit of interest in acquiring a part, or full of the stakes to be sold. However there are a number of companies that might get far less interest from investors, because we are talking about 900 companies, and the names Shuvalov named yesterday were the biggest names, but there could be some smaller names that perhaps would not raise as much money or as much interest on the part of investors.”
RT: Do you think there could be problems in finding clients for these stocks in future?
VT: “There is one fundamental problem which is what would be the perception of investors of the Russian economy and that is likely to be tied to the perception of investors on how the global economy is going. If we are going to see a more stable and perhaps, a bit faster recovery in the global economy, and in the Russian economy, I think the interest will be there. If we are going to see a sort of lukewarm development the way we see it now, both in the global economy and in Russia, meaning that in certain sectors you see some progress, and in certain sectors you don’t, and you don’t have a lot of conviction about where the Russian or global economy would go in, lets say, 6 months time, interest could be lower. So that’s the reason in my view, why the government has put quite a long timeframe for privatization – we are talking about 5 years. It’s not that every year they are going to sell stakes but they are giving themselves some time to breathe if things turn out to be a bit worse than they expected, because my impression is that the government, at this stage, has the main objective of getting a good price for the assets they are going to offer, rather than making a political move and selling assets at any price.”
RT: Why is the government looking to sell stakes in strategic companies, like Rosneft, to the private sector?
VT: “The way I see it, there is no major revolutionary move in that. Because what the government is planning, at least formally at this stage, is that reducing its stake to a lower limit under which the stake would still qualify as a control stake. So the government is not releasing its control over Rosneft. Shuvalov did mention that if the situation is much better the government might think of reducing its stake in both Rosneft and VTB below the controlling stake, but I think that it might be his own idea at this stage, not a government policy. So the government policy is in the framework of strategic areas, the government has outlined a few years ago, which is that Rosneft would still remain the government property – perhaps it would be 50% plus one share, but nevertheless its is still the government.”