Russian oil company Bashneft for sale by government
In this fire sale, the asset is Bashneft, the oil company once owned by Vladimir Yevtushenkov, who was prosecuted and put under house arrest.
Early in his tenure, President Vladimir Putin pursued a policy of controlling the commanding heights of the economy with a nationalization push that elbowed Russian and foreign owners out of strategic industries.
[...] he is inviting investors back, as Russia faces the economic fallout from a second year of Western sanctions and low commodity prices.
The political about-face, part of the seemingly endless cycle in Russia between nationalization and privatization, adds to investors’ worries about being blindsided.
“Any buyer today should understand the risks,” Aleksandr Abramov, a professor of finance at the Higher School of Economics in Moscow, said of the latest planned resale of 51 percent of Bashneft.
[...] investors are willing to pay only about half as much for a Russian company as they would for a Brazilian business with the same earnings potential, according to Renaissance Capital, a Moscow investment bank.
Russia’s mighty oil, mining and industrial holdings looked like a good deal in the early 1990s during the transition from communism to capitalism.
The government tried to create a society of stockholders out of the Soviet ashes by giving everyone vouchers representing shares in state-owned businesses.
Three years later, police arrested Mikhail Khodorkovsky, then Russia’s richest man as owner of the Yukos oil company, bought in the sale under Yeltsin.
The primary pumping asset became Rosneft, the state oil company.
In 2006, Russian regulators forced the Western oil giant Shell to sell a 25 percent share in its valuable Sakhalin Island field after threatening to shut it down for environmental violations.
In the years after, Yevtushenkov steadily picked up shares through a holding company called Sistema, in deals that were certain to have been approved by Kremlin, according to oil analysts.
Along with Bashneft, the government plans to offer shares in Sovcomflot, a shipping company; Alrosa, a diamond miner; VTB, a state bank; and the national energy giant, Rosneft.
Russian oil companies, one run by a former chief executive of Rosneft, have announced plans to bid for Bashneft.
Executives and government officials in India and China have said the countries’ energy giants are potentially interested in buying shares in Rosneft.
Western sanctions over the Ukraine crisis make it difficult for Russia to hold bond sales, a common method for governments to cover budget shortfalls.
At a meeting of presidential economic advisers last month, Aleksei Kudrin, a former minister of economy, suggested that the Kremlin spur growth by easing international tensions, as another option along with privatization.