UPDATE: Russia to prioritize local investors in privatization

(Adds details in last four paragraphs)

MOSCOW, Apr 12 (PRIME) -- Russia will prioritize local investors during privatization, Deputy Economic Minister Nikolai Podguzov said Tuesday at a forum.

The economic ministry is working on preparation of privatization, its conditions are being worked out taking into account market circumstances. The government has not yet chosen privatization agents. “We will continue this work. We will try to adhere to the priority of participation of national investors in privatization,” he said.

The ministry has held meetings with largest Russian private pension funds and discussed options of their participation in privatization.

“We have found a feedback from the point that the funds are interested in purchases of shares and have resources to do that,” he said.

“It is difficult to provide any detailed information about how actively pension funds will take part in privatization, as non-government pension funds demand stricter conditions, which are now only being worked out taking into account all circumstances and the beginning of work of an agent that the government is to choose.”

Previously, First Deputy Prime Minister Igor Shuvalov said the government was considering a large-scale privatization plan for 2016. On April 5, the Economic Development Ministry has chosen only Russian banks to organize privatization of oil company Bashneft, uncut diamond mining giant ALROSA and the country’s second largest bank VTB.

But Alexander Korsik, CEO of Bashneft, said that it is reasonable to work out the company’s secondary public offering (SPO) and to negotiate with strategic investors while preparing for privatization.

“I think it would be right to walk two parallel ways – to prepare the company for an SPO just like in 2014, to test the market…which will create competition for any strategic investors. And at the same time negotiate with strategic investors and organize transparent and understandable process. And we will be able to make a choice at the final point, I don’t know when,” he said.

There has been no worthy strategic investor for the stake in Bashneft other than oil major Lukoil so far, he said.

Multi-industry holding AFK Sistema, which owned a 73.94% stake in Bashneft before it was nationalized, will not take part in privatization of the oil company, Sistema’s President Mikhail Shamolin said.

End