RUSSIA’s state-owned shipping company Sovcomflot could make an initial public offering on the London Stock exchange by the end of the year, as the Russian government looks to push ahead with its ambitious privatisation plans.
Sovcomflot, which is sending test cargoes along a new Arctic route to service Russia’s offshore oil fields, is at the top of the government’s list of firms to be privatised as Vladimir Putin, the prime minister looks to lower the government's stake in some of the country’s largest companies.
At the end of June, Russia appointed Morgan Stanley to manage the sale of at least 25 per cent of Sovcomflot. City A.M. understands that Morgan Stanley favours a listing in London which would be quicker whilst the government is believed to prefer a listing in New York, a more traditional market for shipping firms.
Sources close to the company believe that timing of the float will depend on the recovery of the shipping market, which has been hit by the economic global slowdown and a fall in consumer demand.
Sovcomflot, which employs 8,000 people, has a fleet of 157 tankers that specialise in transporting crude oil and liquified natural gas across the world. Early plans for an initial public offering were tabled in 2008 but were cancelled in the face of the global slump.
Russia is also expected to sell shares over the next few years in Moscow’s Sheremetyevo airport, Russian Railways, and Aeroflot, the state-owned airline.
MEET THE ADVISERS
Morgan Stanley was appointed by the Russian government in June to manage the initial public offering (IPO) of Sovcomflot. The New-York-based bank was one of 23 advisors shortlisted along with JP Morgan Chase & Co and Deutsche Bank to help manage Russia’s $36bn three-year asset sale programme. Morgan Stanley has been steadily expanding its presence in Russia since it first opened offices in 1994. In 2005 the bank led the $422m (£256m) IPO of Evraz Group, Russia's largest steel company and was joint broker for the $1.56bn IPO of OJSC Sistema, a media research company, which was at the time largest flotation on the London Stock exchange by a foreign company. More recently, the bank has acted as joint-bookrunner for Russian logistics group Global Ports, which raised $500m after it sold a 25 per cent stake on the London Stock Exchange in June.