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Sunday, October 23, 2016

Why ALROSA privatized in the hurricane pace

The government sells for 10.9% of the diamond company “ALROSA”. With unprecedented speed. Why?

photo: morguefile.com

Start with two messages. First from RIA Novosti, it arrived on tape July 6, in 20 hours 18 minutes: “the Government of the Russian Federation on Wednesday opened the bid book for the secondary placement (SPO) of shares of ALROSA in the amount of 10.9% in the framework of privatization, told journalists the Minister of economic development Alexei Ulyukaev. The second gave TASS July 7 at 12 hours 11 minutes: “the Book of applications for participation in the sale of a 10.9% stake in diamond miner ALROSA completed”.

Curious. First, the government are long conversations about whether it is the privatization, then the stringy arguments with candidates for privatization on the timing of the procedure. Routine. All have long been accustomed to the fact that privatization plans are not executed. And all of a sudden, once or twice. And at the moment, worse than that for privatization in the expectation of foreign investors is hard to find. The market begins to sink into pessimism, investors have pronounced postpregnancy syndrome, interest in risky assets is almost zero. And exactly at this moment goes under the hammer quite a tidbit, the part of the diamond wreath of Russia.

Of course, you can forget about foreign investors. But then why start a new big wave of privatization, which counts the Ministry of Finance, under the feet of which a widening gap in the budget deficit, with the diamond company? Isn’t that part of the traditional image of Russia in the West along with black caviar, which if legal, it has long been Iranian, vodka and other dolls?

For example, Yaroslav Lisovik, Professor, Department of world economy at the Diplomatic Academy, and chief economist at Eurasian Bank of development, directly says that the start of privatization of “ALROSA” just due to a desire to return Russia to world financial markets.

Certainly among the buyers will be foreigners. But if they were in the main rate, then why such a sprint pace? Where negotiations, road-show finally?

Of course, we say “boost mode” is a normal practice. It is, but under certain conditions: when buyers known to the seller, and the new look he is not going to.

Here, by the way, there is another interesting detail: after the announcement of the privatization of shares of “ALROSA” went down, so customers will get goods at a discount, and the budget risk short of the revenue expected.

So who are the buyers? Among those at the hearing, it is the Russian direct investment Fund, pension funds Sberbank and VTB. What is called in the fields, I note that they are all, to put it mildly, very far from the control of the state or not at the private Bank, so the privatization of Orwellian, it turns out, the state shifts the package of shares from one pocket to another, but it’s the details. Among private buyers called the structures of Boris mints, which owns, in particular, a number of major NPF, as well as the owner of the BIN Group Mikhail Shishkhanov.

I think, to look for possible beneficiaries in the same direction. Probably not by accident the rapid start of privatization comes after the recently from has been removed Rosimushchestvo Olga Dergunova, it seems, resisted the privatization rush. Among her many detractors called (so the post at the head of the bins of the Motherland), including, for example, Yuri Trutnev, and he is not only Deputy Prime Minister but also the President’s Plenipotentiary representative in the far Eastern Federal district, that is, at least on a geographical basis manages ALROSA, and if so, then the future of the company and its shareholders he clearly cares for.

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