Russia is preparing to sell 7.8 percent of its shares in Sovcomflot to finance its budget deficit. The Federal Agency for State Property Management of Russia (Rosimushchestvo) has initiated a tender to select a consultant to organize this sale. The deadline for submitting applications is set for November 17, and the estimated value of this sale based on recent stock prices is around 15 billion rubles (equivalent to 184 million dollars).
Details of the Sale and Government Control
Currently, the Russian government holds 82.8 percent of Sovcomflot's shares and had sold 17.2 percent of the company in 2020. With this recent sale, the government's stake will decrease to 75 percent plus one share, which will still maintain control over the largest shipping company in Russia.
Following this announcement, Sovcomflot's shares fell by nearly 4 percent on Tuesday. There are concerns that such a sale may require a significant discount. This action comes as Sovcomflot's financial situation has significantly improved, with the company reporting a net profit of 284 million dollars in the first half of this year, compared to a loss of 435 million dollars the previous year. Time-charter-equivalent revenues also increased by 61 percent during this period, reaching 809 million dollars.
Sanctions and Financial Challenges
Sovcomflot remains under sanctions from the United States, the European Union, and the United Kingdom due to its role in transporting Russian energy exports. These sanctions have added to the company's financial challenges, prompting Russia to consider selling more shares of its other assets as well. For example, the country is examining the sale of 20 percent of the shares in the port of Novorossiysk and nearly 24 percent of Aeroflot's shares to secure the necessary financial resources to cover the increasing costs of the war in Ukraine.
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