M. Stulov / Vedomosti

The New York Stock Exchange (NYSE) will be the main platform for the IPO of 25% of Sovcomflot shares, several sources close to the board of directors of the state company told Vedomosti. This was proposed by the shipping company's management and Deutsche Bank, the government-selected organizer of the placement, one of them clarified. According to Vedomosti's source, First Deputy Prime Minister Igor Shuvalov and the Federal Property Management Agency supported the idea of placing on the New York Stock Exchange. "It is in New York that the majority of shipping companies are traded and there is the greatest demand for such securities," he explains (see inset). The issue of choosing platforms for the Sovcomflot IPO will be decided again before the placement, another source of Vedomosti stipulates.

"There is a high probability that some part of Sovcomflot will have to be placed on the MICEX," notes a federal official. President Vladimir Putin has repeatedly said that privatization transactions should take place in Moscow. "We will privatize state assets on domestic financial platforms," he said during the St. Petersburg Economic Forum. According to him, this is one of the steps in developing the stock market in Russia. However, Putin also said that the state intends to sell assets "at truly favorable, fair prices." In the spring, VTB placed its shares on the Moscow Exchange for $3.3 billion, and in the fall it plans to sell 14% of Alrosa shares there. But Sovcomflot management is against placing some of the shares in Moscow: they will have to be placed with a loss in profitability, says one of the sources.

Representatives of Shuvalov, Rosimushchestvo and Sovcomflot declined to comment.

New York is indeed the best choice for an IPO of a shipping company. There the state can receive the largest premium given the protracted crisis in the market for sea transportation of oil and oil products, agrees Raiffeisenbank analyst Konstantin Yuminov. Tanker freight rates fell by half to $25,000–50,000 per day due to an oversupply of vessels on the market in 2008 and have still not reached the pre-crisis level. But since 2010, freight rates for gas carriers have been growing. And Sovcomflot has 10 vessels of this type. The crisis in the tanker market has also affected the shipping company's financial results: in the first quarter of this year, its revenue fell by 6.4% to $201.8 million, net profit by 95.6% to $2 million, and EBITDA by 30% to $93.1 million. The government has also lowered its valuation of Sovcomflot over the year. Last summer, then-Minister of Economic Development Andrei Belousov valued 25% of the shipping company at 25-27 billion rubles (100-108 billion rubles for the entire company). But in the spring of this year, the Ministry of Economic Development lowered its valuation of the privatized package to 10.6 billion rubles (42.2 billion rubles for the entire company).

The sale of 25% of Sovcomflot shares is included in the current privatization program (up to and including 2013). At the same time, half of the package being sold should be the state share. And the remaining shares will be sold by the company itself, Vedomosti sources said earlier.

But Vedomosti’s sources cannot say when the deal will take place. There is no decision on this matter yet. “We are in no hurry. The company is ready for placement, we are looking for ‘windows’, for the opportunity to do this,” Interfax quoted Olga Dergunova, head of the Federal Property Management Agency, as saying in May. “The markets are really very bad for placing transport companies now.” Earlier, Vedomosti’s sources in federal agencies said that the sale of a blocking stake in Sovcomflot would not take place in 2013. By the end of 2016, the government expects to sell 74.9% of Sovcomflot (earlier, it was planned that the state would completely withdraw from the company’s capital).

Sovcomflot to dock in New York