Asset privatized: Svyazinvest
Percent sold: 25% of shares plus one
Amount paid: $1.9 billion
Date: July 25
Successful bidders: Uneximbank, Soros Quantum Fund, Deutsche Morgan Grenfell, Morgan Stanley Asset Management
In the last minutes before five o'clock one Friday this past summer, the biggest privatization deal in Russia came down to two envelopes. The atmosphere that day was electric.
At 20 minutes to five Moscow time, Leonid Rozhetskin arrived at Russia's privatization committee offices with an envelope in his hand. The head of investment banking for Renaissance Capital in Moscow was carrying a top-secret billion-dollar bid for 25% of Svyazinvest, the country's telecommunications network and the most eagerly awaited privatization deal to date.
Svyazinvest's privatization had been dogged by controversy since 1995 when Italian operator Stet scrapped a strategic purchase at the eleventh hour after financing squabbles. And, following Russia's well-publicized loans-for-shares scandals, cynicism was high that this latest round of privatization would be no less corrupt.
But now, in 1997, the Russian government was strapped for cash and determined to raise more funds with an open, competitive auction for the state's reorganized sale of 25% of Svyazinvest.