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Rosgosstrakh will sell 15% of shares to its employees
One of the largest Russian insurance companies, Rosgosstrakh, will sell 15% of its shares to its employees next year. The head and co-owner of the Rosgosstrakh group, Danil Khachaturov, spoke about this yesterday. In his opinion, in this way it is possible to increase the loyalty of company employees. Market participants call the decision to sell such a large stake to ordinary employees unprecedented and estimate it at $400 million.“In 2008, up to 15% of Rosgosstrakh shares will be sold to the company’s employees. This decision was made at the last meeting of shareholders. More than 100 thousand of its employees and agents will be able to become co-owners of the insurer,” Mr. Khachaturov said yesterday.
“After the privatization of the early 1990s, it was very rare for Russian companies to sell shares to ordinary employees, and this did not happen at all in the insurance market,” notes Vladimir Sergievsky, an analyst at Finam Investment Company. “Usually, under bonus programs, top managers can receive in total no more than 5% of shares.” As a rule, ordinary employees are offered to participate in the capital if the company goes public. Thus, during the recent additional issue of shares of Sberbank and the IPO of VTB, employees of these banks purchased securities, but on the same basis as other investors. Deputy General Director of RESO-Garantiya Igor Ivanov told Vremya Novostey: “When our company was considering the option of holding an IPO, we envisaged the possibility of selling part of the shares to our agents, but we were talking about a very small package.”
Rosgosstrakh is not a public company; almost three quarters of its shares belong to private investors, 25% plus four shares belong to the state. The market believes that the company is controlled by its head Danil Khachaturov. To obtain the right to become a shareholder of Rosgosstrakh, you must work in the company for at least one and a half to two years. Also, all employees and agents will be divided into categories, and agents in the fourth (highest) category will be able to buy more shares than beginners. The sale of shares will be organized by closed subscription; employees will be able to purchase shares at a discount. According to Mr. Khachaturov, an independent appraiser will determine the market value of the company and the offer price of shares at the end of the year.
Now Russian analysts estimate a 15 percent stake in the company at several hundred million dollars. According to Evgeny Grigoriev, an analyst at BrokerCreditService Management Company, “based on the volume of premiums collected by Rosgosstrakh and taking into account the planned placement price of the canceled RESO-Garantia IPO, the 10-15% package can be conservatively estimated at no less than $250-400 million. According to preliminary data, in the first half of the year the volume of insurance premiums collected by the company is expected to reach 28.1 billion rubles.
Market participants believe that the sale of shares should increase the motivation of ordinary employees. “Of course, such a measure will increase employee loyalty to the company, which is a pressing problem for some large insurers, including Rosgosstrakh,” believes Mr. Ivanov.
In addition, according to Ingosstrakh vice-president Ilya Solomatin, “this is a good chance for the company to attract additional funds. When an IPO or sale of a stake to a large buyer occurs, the company carries out very serious work to evaluate the business, and also fulfills various requirements of exchanges, regulatory authorities or a strategic investor. In this case, Rosgosstrakh will not have to spend a lot of time and money on preparatory work.”
The acquisition of shares will be voluntary. “We will not force anyone to buy shares. And we won’t check people’s loyalty - who bought and who didn’t - either,” said Mr. Khachaturov. “Moreover, we won’t even try to persuade anyone too much.” Co-ownership of a company is in itself a powerful motivating factor. And if in the future we decide to place shares on the open market, they will be significantly more expensive than when we sold them to our employees.”
The publication's interlocutors also believe that the purchase of such shares has a financial justification if the company is open and its securities are traded on the market. According to Mr. Ivanov, “in this case, any minority shareholder can at any time buy and sell securities at the market price. If a company is not traded, then it is quite difficult to fairly assess the value of its shares and quickly find a buyer.” Vladimir Sergievsky from Finam shares the same opinion: “It is difficult to estimate the real value of these securities.”
Let us note that Rosgosstrakh is not yet planning to conduct an IPO, nor, indeed, to look for a strategic investor. According to Mr. Khachaturov, experience shows that a strategic investor always seeks to gain control over a company. “For the next ten years, we intend to remain an insurer with Russian capital,” he said.
Rosgosstrakh will need about $1 billion in investments to ensure leadership in the Eastern European market in the next five years. This assessment was given by the head of the Rosgosstrakh group, Danil Khachaturov. In this regard, Rosgosstrakh does not plan to make any investments in other financial institutions in the next five years, for example, in creating its own mutual funds or management company. As previously reported, Rosgosstrakh plans to become one of the insurance leaders in the Eastern European market in five to seven years. INTERFAX