Operation ‘Privatization’: who will get billions of proceeds from the sale of shares?
One of the most intriguing recent events — is the inclusion in the forecast plan of privatization of state property of the Republic of Tatarstan in 2016 of share holdings of three companies: PJSC Nizhnekamskneftekhim (22%), PJSC Tatneft named after Shashin (4.31%), JSC TANEKO (9%). The coincidence of a huge multi-directional deals by the government of the Republic, as well as the closed nature and the paucity of information made economic observer of Realnoe Vremya Albert Bikbov to form his own version of these tectonic shifts.
An intrigue of mega deals
JSC Svyazinvestneftekhim has transferred 25% shares of PJSC Nizhnekamskneftekhim (NKNK) to the Ministry of Land and Property Relations of RT.
According to preliminary estimates, the cost of included to the plan of privatization shareholdings of large Tatarstan enterprises is estimated at tens of billions of rubles.
Unfortunately, the transparency of such extraordinary events in privatization sphere leaves much to be desired. In the press release of RT Ministry of Land and Property there is a terse and vague explaining:
'The decision is due to the need for more efficient use of existing resources of the Republic of Tatarstan. It is planned that these shareholdings of enterprises will be used to support and develop priority directions of the economy and leading enterprises and companies of the Republic of Tatarstan, and will also strengthen their industrial cooperation within the emerging Kama petrochemical cluster'.
Why?
Why do they need to say goodbye to these assets during the crisis and low prices? Is there a lack of money in the budget? No, it is not — we do not even raise a question about 10% budget sequestration, while in other parts of Russia they do. In our report 'Will there be budget sequestration in Tatarstan?' we explained that there is no any threat of budget cuts. Therefore, there is enough money to fulfill budget engagements.
Then why? Privatization for privatization in the form of a state's withdrawal from the strategically important enterprises? Moreover, formally, the shareholdings have already been privatized: by JSC Svyazinvestneftekhim.
Coincidence?
The announcement of this privatization deal coincided with another mega deal of the state. We are talking about sudden nationalization of a huge player in the market of real estate — PLC Ak Bars Development (ABD).
The group was founded in 2004 and currently performs the functions of a management company, consolidating a group of full service companies and using the capacity of construction and industrial companies that are able to provide the full range of real estate development. The group has implemented or continues to implement several major projects — residential complex Kazan XXI century (303 thousand square meters of housing, the first phase of a multifunctional complex Sedmoye Nebo), Solnechny gorod (321 thousand square meters of housing), Svetlaya Dolina (385 thousand square meters of housing), Kazan Usadba (124 cottages on 64 thousand square meters), Chistoye Nebo (73 thousand square meters of housing). The company constructed 38 multifamily residential buildings, the area of housing amounted to about 530 thousand square meters.
But the most interesting is that this group has a huge land bank; according to the website, now in ABD development are no less than 526 hectares of land, and in very good locations (as well as in urban areas).
It is clear that it is difficult to estimate the cost of this monster, but from the first glance you will notice that we are talking about tens of billions of rubles. So, the sudden announcement of the nationalization (the purchase) by the state raises the question: where will the budget get money?
The coincidence of these two mega deals (privatization of shares and the nationalization of the developer), and the order of the sums force us to assume that all this is not an accident, and all the numbers add up.
Saving Private Garayev
It is clear that in such huge development projects ABD was one of the key borrowers of the related PJSC AK BARS Bank (ABB). The newly made Chairman of the Board Zufar Garaev got a large loan portfolio susceptible to crisis.
On 13 August 2015, Fitch Ratings CIS Ltd said straightforward in its press release:
'Although the asset quality is weak due to a significant high-risk corporate lending and lending of companies that are directly or indirectly connected with the Bank, investments in real estate (according to the reports, the majority of these assets are available and not restructured) at 116 billion rubles, or 420% of fixed capital according to methodology Fitch at the end of 2014.'
If according to the data from 1 January 2015, the loan portfolio of ABB amounted to 240 billion rubles, then it is about half of the loan portfolio.
Lending to real estate investments in the current financial crisis can be quite a burden for the bank. Almost now we can see just unprecedented measures taken by the authorities of the Republic and the Central Bank of Russia on the bank bailout — just recently it has received the support at almost 32 billion rubles. First, within the programme of additional capitalization of the banking sector AK BARS received OFZ at the amount of 12.1 billion rubles. Then, State Housing Fund of RT acquired additional issue ABB at 9.8 billion rubles, having purchased 25.8% shares of the bank. Finally, on 15 December Svyazinvestneftekhim gave 16.09% shares almost at 10 billion rubles to Kazanorgsintez in the net assets of AK BARS Bank as a direct support. In the Bank there are accounts and large deposits of the leading enterprises of Tatarstan. But, apparently, they require another support that the bank may receive if the group ABD repay existing debt connected with the implementation of huge development projects. It is impossible to settle a debt at a graveyard market, but if the government will undertake the nationalization of ABD, there will be the required amount of money to settle the financial debt to the Bank…