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Capital Markets

Russia: $30 billion for state coffers

Rash of strategic sales and IPOs planned.

Russian state coffers are set for a bumper 2006, as the government prepares to sell stakes in some of the largest state-owned companies.

Companies being prepared for sale include Rosneft, Vneshtorgbank, Gazprombank, Svyazinvest, Fesco and, possibly, Kamaz.

If deals are successfully completed, via a mixture of strategic sales and IPOs, state revenues could benefit by $30 billion, according to Dresdner Kleinwort Wasserstein research analyst Eugene Popov.

“Recent statements by the economy minister and the head of the financial regulator indicate willingness on the part of the government to sell stakes in the largest state-controlled entities, which operate in the energy, banking and telecoms sectors,” he says.

Control

With the possible exception of Svyazinvest, the state should retain control over the companies for sale. “Aside from the traditionally expected advantages that come with the foreign ownership, banks could benefit from better diversification of their loan portfolios and access to new markets,” Popov says.

Investor interest is expected to be high. “Some of the companies to be sold represent unique opportunities to participate in the particular sectors’ growth with a lesser degree of risk than buying into the private firms or establishing greenfield operations,” Popov says.

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