Russia through a lens
Deloitte Research Centre Second issue, 1Q 2016 Content
1. Russia in figures 2. Research Centre market analysis 3. Global wind 4. Top M&As
We are pleased to present the latest edition of Russia Through a Lens, the macroeconomic journal produced by the Deloitte Research Centre in Moscow. Established in December 2015, the journal is published quarterly and falls under the Research Centre’s monitoring activities. In Russia Through a Lens, we focus on current key trends in the Russian economy and present our research in the following fields: • Russia in Figures – statistical analysis • Research Centre market analysis • Top M&As If you have any questions or suggestions regarding this research, please do not hesitate to contact us: [email protected]
Designed by the Deloitte Design Group, Moscow Russia in figures
GDP
GDP, bln RUB
150, 000.0 50% 25% 24% 24% 29% 130, 000.0 19% 30% 12% 6% 10% 4% 10% -6% -0.8% 110, 000.0 8.2% 8.5% 5.2% 4.5% 4.3% 3.5% 1.3% 0.7% -10% -7.8% -3.7% 90, 000.0 77,945.1 80,804.3 80,157.9 -30% 66,926.9 71,016.7 70, 000.0 59,698.1 -50% 50, 000.0 46,308.5 -70% 41,276.8 38,807.2 33,247.5 -90% 30, 000.0 21,609.8 21,609.8 -110% 10, 000.0 -130% -10, 000.0 -150% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F
Source: Rosstat, Ministry of Economic GDP, bln RUB GDP growth (at current prices) GDP volume indices Development (forecast)
The data for the period from 2011 includes changes the data presented in the balance of payments related to the implementation of the international developed according to the methodology provided methodology for housing services evaluation; by the Sixth Edition of the Balance of Payments and to the evaluation of capital consumption, taking International Investment Position Manual (BPM6) into account its current market value; to the introduced by the International Monetary Fund. conformation of data on exports and imports with
Q1 GDP, bln RUB 18,209.7 18,000 17,138.9 15,891.7 16,233.5 16,000 14,925.0 14,000 12,844.3 12,000 9,995.8 10,000 8,877.7 8,334.6 8,000 6,780.2 5,792.9 6,000 4,000 2,000 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F*
* Central Bank preliminary estimate
Forecasts: Ministry of Central Bank Standard & A. Kudrin, Gaidar Institute Economic Poors ex-Minister Development of Finance
2016 -0.8% -1% -1.3% -1% to +0.5% -2%
4 Russia in figures
Inflation
Inflation, %
14.0 13.3 12.94
12.2 12.0 11.9 11.4
10.0
9.0 8.8 8.8 8.0 7.5 6.6 6.1 6.5 6.0 6.0 6 6.5
4.0 4 4
2.0
0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2015 2016 2017 2018
Ministry of Economic Development (forecast) Central Bank (forecast) Fact
Forecasts:
Source 2016
International Monetary Fund 9.8%
World Bank 8%
Gaidar Institute 6.5–7.0%
Gaidar Institute (Consumer Price Index) 7.7%
Inflation in March in 2016:7.4%-7.6%* Inflation target in 2017: 4%**
*The inflation figure is the consumer price growth rate over the corresponding month of the previous year. **The inflation target is set for the consumer price growth rate over the corresponding month of the previous year (Central Bank). Russia in figures
Trade structure
Period Jan-Dec 2015 • Foreign trade turnover: USD 530.4 billion (-33.2 percent YoY) • Trade balance: surplus of USD 161.4 billion (-USD 48.9 billion YoY) • Exports: USD 345.9 billion (-31.1 percent YoY) • Imports: USD 184.5 billion (-36.7 percent YoY)
Imports from non-CIS countries (period Jan-Dec 2015): Percentage in Imports to in monetary terms in physical terms categories non-CIS Textiles and footwear 6.0% -34.2% -27.1% -30.1% • pipes (-33.5%) Metal products 5.6% -36.8% • flat rolled products of iron or non-alloy steel (-40%) • cosmetic products (-15.4%) Chemical products 19.1% -27.6% -15.0% • plastics (-25.7%) • rubber (-21.8%) • optical instruments and apparatus (-35%) • mechanical equipment (-33.1%) Machinery and auto 48% -39.4% n/a • electrical equipment (-36.5%) • cars (-49.9%) • trucks (-65.9%) Food and raw materials for their 13.7% -35.0% -20.5% production
Imports from CIS countries (period Jan-Dec 2015):
in monetary terms in physical terms categories
Energy products 10.2% -24.1% -8.8% • pipes (-44.8%) Metal products 12.5% -47.1% -27.7% • flat rolled products of iron or non-alloy steel (-4.6%) • products of inorganic chemistry (-1.4%) Chemical products 14.9% -19.0% -5.6% • plastics (-6%) • rubber (-27.3%) • mechanical equipment (-51.2%) • electrical equipment (-54.7%) Machinery and auto 20.2% -49.3% n/a • optical instruments and apparatus (-45.4%) • cars (-58.6%) • trucks (-9.3%) • meat (34.7%) Food and raw • butter (13.8%) materials for their 20.6% 12.4% n/a • cheese (19.4%) production • milk (-9.5%) • fish (-14.9%) Textiles and footwear 5.7 -29.2% 1.3% cotton cloth (1.5%)
Source: Federal Customs Service
6 Russia in figures
Trade structure Exports to non-CIS countries (period Jan-Dec 2015): Percentage in in monetary terms in physical terms categories Exports to non-CIS • crude oil (11.2%) Energy products 66.4% -37.7% 6.3% • oil products (4.9%) • natural gas (14.7%) • ferrous metals (8.4%) • cast iron (24.2%) Metal products 9.4% -16.6% 9.3% • semi-finished products of iron or non-alloy steel (7.9%) • ferroalloys (-16.1%) • products of inorganic chemistry (11.6%) Chemical products 6.5% -12.4% 3.6% • fertilizers (1.7%) • plastics (22%) • rubber (18.4%) • cars (69.2%) Machinery and auto 6.0% 12.9% n/a • trucks (6.3%) Food and raw • barley (35.5%) materials for their 4.0% 13.6% n/a • milk and cream (11.7%) production • lumber (20.8%) Timber, pulp and • plywood (16.8%) 2.7% -9.8% n/a paper products • cellulose (10.7%) • rough wood (-7.5%)
Exports to CIS countries (period Jan-Dec 2015):
in monetary terms in physical terms categories
• crude oil (-5.2%) Energy products 39.5 -36.5% -5.5% • oil products (-13.6%) • natural gas (-15.2%) • semi-finished products of iron or non-alloy steel Metal products 10.7 -27.1% 5.2% (34.5%) • flat rolled products of iron or non-alloy steel (-15%) • pharmaceuticals (16.5%) • paints and varnishes (120%) Chemical products 13.4 -16.0% n/a • plastics (12.4%) • nitrogen fertilizers (-27.3%) • cosmetic products (-9.1%) • mechanical equipment (-16.9%) Machinery and auto 16.4 -29.5% n/a • electrical equipment (-33.2%) Food and raw • pork (530.0%) materials for their 9.4 -17.9% 9.1% • wheat (50.2%) production • lumber (-16.8%) Timber, pulp and • plywood (-17.5%) 3.8 -35.5% -10.1% paper products • newsprint (-19.3%) • cellulose (4.2%)
Source: Federal Customs Service Russia in figures
Currency rate
RUB vs. EUR and USD, 1 January 2014 – 1 April 2016 100
90
80
70
60
50
40
30
20
10
0 1-Jul-14 1-Jul-15 1-Jan-14 1-Jan-15 1-Jan-16 1-Jun-14 1-Jun-15 1-Jun-15 1-Apr-14 1-Apr-15 1-Apr-16 1-Feb-14 1-Feb-15 1-Feb-16 1-Oct-14 1-Oct-15 1-Sep-14 1-Sep-15 1-Dec-14 1-Dec-15 1-Nov-14 1-Nov-15 1-Mar-14 1-Mar-15 1-Mar-16 1-Aug-14 1-Aug-15 1-May-14 1-May-15
Source: Central Bank
EUR-RUB USD-RUB 90.00 +16% 82.53 19% +18% 78.13 +17% 80.00 74.73 71.02 70.36 70.00 65.41 63.19 60.36 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Q1 2015 Q1 2016 March March Q1 2015 Q1 2016 March March 2015 2016 2015 2016 Source: Central Bank
USD-RUB forecasts (average per year) Ministry of Economic Apecon (Economic Gaidar Institute Development Forecasting Agency)
2016 RUB 63.5 RUB 62.2 N/A
2017 N/A RUB 65.7 RUB 79.44
8 Russia in figures
Central Bank key rate
Central Bank Key Rate, %
18.0 16.0 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0 31-Jul-14 31-Jul-15 31-Jan-14 31-Jan-15 31-Jan-16 30-Jun-14 30-Jun-15 30-Apr-14 30-Apr-15 31-Oct-14 31-Oct-15 28-Feb-14 28-Feb-15 29-Feb-16 30-Sep-14 30-Sep-15 31-Dec-14 31-Dec-15 31-Mar-14 31-Mar-15 31-Mar-16 30-Nov-14 30-Nov-15 31-Aug-14 31-Aug-15 31-May-14 31-May-15
Source: Central Bank
The refinancing rate is 11 percent (from 1 January 2016). From 1 January 2016, the Central Bank of Russia will not set a separate value for the refinancing rate of the Central In accordance with a decision of the Board of Directors of Bank of Russia. the Bank of Russia, effective 1 January 2016, the value of the refinancing rate of the Central Bank of Russia will be equal to the key rate of the Central Bank of Russia set at the respective date. Russia in figures
Top-pricing (Nickel)
Nickel Maximum for the period 21,000 19,250 19,040 19,000 18,800 18,325 18,505 17,000 16,265 16,275 15,911 15,15015,165 15,740 15,000 14,677 14,095 13,980 13,950 13,000 12,600 12,395 12,015 12 years minimum 11,000 11,04010,330 10,045 10,060 9,000 8,855 8,820 8,610 8,530 8,485 7,000 1-Jul-14 1-Jul-15 1-Jan-14 1-Jan-15 1-Jan-16 1-Jun-14 1-Jun-15 1-Apr-14 1-Apr-15 1-Apr-16 1-Feb-14 1-Feb-15 1-Feb-16 1-Oct-14 1-Oct-15 1-Sep-14 1-Sep-15 1-Dec-14 1-Dec-15 1-Nov-14 1-Nov-15 1-Mar-14 1-Mar-15 1-Mar-16 1-Aug-14 1-Aug-15 1-May-14 1-May-15
Nikel, LME, $/t
Forecasts: Nickel Source 2016
Goldman Sachs USD 14,500
Morgan Stanley USD 10,692
10 Russia in figures
Top-pricing (Oil, gas)
Brent oil, natural gas Maximum for the period 6 120 112 109 108 108 109 5 106 106 103 4.9 4.8 95 5 100 4.6 4.6 4.4 4.4 85 4.0 4.1 4 80 4.0 3.8 3.9 68 Minimum for 4 62 67 65 58 63 the period 60 53 55 3 52 53 48 50 2.9 2.8 45 2.7 2.7 2.7 2.7 2.7 2.7 38 37 40 40 3 40 2.6 2.5 36 2.4 2.3 2.3 2.2 2 20 1.992 1.959 1.7 2 0 1 1-Jul-14 1-Jul-15 1-Jan-14 1-Jan-15 1-Jan-16 1-Jun-14 1-Jun-15 1-Apr-14 1-Apr-15 1-Apr-16 1-Feb-14 1-Feb-15 1-Feb-16 1-Oct-14 1-Oct-15 1-Sep-14 1-Sep-15 1-Dec-14 1-Dec-15 1-Nov-14 1-Nov-15 1-Mar-14 1-Mar-15 1-Mar-16 1-Aug-14 1-Aug-15 1-May-14 1-May-15
Source: Holding "Finam" Brent Crude Oil, ICE, $/bbl Natural Gas, NYMEX, $/mmbtu
Forecasts: Natural gas Source 2016
U.S. Energy Information Administration USD 2.65
Standard & Poors USD 3
Crude oil Source 2016 2017 2018 U.S. Energy Information USD 34 USD 40 Administration
World Bank USD 37
Base scenario: USD 50 Central Bank of the Russian Federation Risk forecast: less than USD 40
Conservative scenario: USD 40 Ministry of Economic Development Base and target scenario: Base and target scenario: Base and target scenario: USD 50 USD 52 USD 55 Standard & Poors USD 40 USD 45 USD 50
Pessimistic scenario: USD 40
Gaidar Institute Base scenario: USD 55
Optimistic scenario: USD 70 Russia in figures
Top-pricing (Gold, aluminium)
Gold and aluminium
2,300 Maximum for the period 2,100 2,097 2,037 2,014 1,988 1,920 1,900 1,891 1,950 1,864 1,829 1,815 1,800 1,853 1,785 1,740 1,700 1,754 1,784 1,691 Minimum for the period 1,706 1,605 1,572 1,620 1,572 1,501 1,541 1,500 1,501 1,521 1,481 1,449 1,329 1,328 1,300 1,289 1,288 1,284 1,285 1,251 1,284 1,207 1,187 1,192 1,246 1,183 1,174 1,142 1,142 1,245 1,235 1,151 1,214 1,182 1,122 1,100 1,174 1,114 1,095 1,071 1,061 900 1-Jul-14 1-Jul-15 1-Jan-14 1-Jan-15 1-Jan-16 1-Jun-14 1-Jun-15 1-Apr-14 1-Apr-15 1-Apr-16 1-Feb-14 1-Feb-15 1-Feb-16 1-Oct-14 1-Oct-15 1-Sep-14 1-Sep-15 1-Dec-14 1-Dec-15 1-Nov-14 1-Nov-15 1-Mar-14 1-Mar-15 1-Mar-16 1-Aug-14 1-Aug-15 1-May-14 1-May-15
Source: Holding "Finam" Gold, COMEX, $/t oz Aluminium, LME, $/t
Forecasts: Gold Source 2016
JP Morgan USD 1,040
ABN Amro USD 800
HSBC USD 1,250
Aluminium Source 2016 2017 2018
Goldman Sachs Group USD 1,525 USD 1,625 USD 1,700
12 Research Centre market analysis
Manufacturing market in Russia – 2016 Key findings
Our analysis shows that in early 2016, the overall The expectations of participants in the manufacturing condition of the manufacturing sector in Russia has sector with respect to the prospects for the sector been characterised by inequality in the business in 2016 are quite positive: 57 percent of the environment. This is reflected in the divergence respondents expect improvements or no changes. of opinion among our respondents: whereas 50 Companies in the chemical industry and companies percent of the respondents have negative views with a total income from RUB 10 to 50 billion are more on the current market conditions, the other 50 optimistic about improvements in 2016 (by 12 pp percent of the respondents find them quite favourable and 9 pp, respectively). for further business development. It should be noted that in view of the current conditions, The opposite trend can be observed among foreign companies with localised production as well manufacturers of metal products (the share of negative as manufacturers of metal and engineering products expectations has increased by 14 pp) and foreign are experiencing more difficulties (the share of negative companies with localised production (the share views has increased by 27 pp and 17 pp, respectively). of negative expectations has increased by 6 pp).
The opposite trend can be observed among representatives of smaller companies (with up to RUB 10 billion of annual income) – the share of positive The expectations of participants in the manufacturing views on the current market situation has increased sector with respect to the prospects for their by 20 pp. businesses in 2016 are very positive: 83 percent of the respondents expect improvements or no changes for their companies, provided the current positive assessment of the market conditions. In general, the current state of the manufacturing The share of positive expectations with respect sector in Russia may be described as positive: the total to prospects for their businesses in 2016 is significantly positive response rate is 76 percent. higher among chemical industry representatives The lion's share of negative assessments of the (by 22 pp) and companies with a total income from companies' current positions relates to industrial RUB 10 to 50 billion (37 percent). equipment manufacturers (33 percent). Mechanical engineering companies (including aircraft Large companies (with at least 1,000 employees) engineering and shipbuilding) appear to be less are more concerned about challenges facing today's optimistic in their expectations: the share of such business environment than smaller companies (by 10 pp). companies expecting business development conditions to worsen is 10 pp higher than the average.
Pessimistic views are also more common among foreign companies with localised production in Russia than Russian companies (by 14 pp).
14 Research Centre market analysis
Manufacturing market in Russia – 2016 Key findings
Top-5 factors affecting market development The development of Chinese manufacturing affects • Reduction in currency risks 68 percent of manufacturing representatives • Availability of financing in Russia and 56 percent of companies note • Reduction in geopolitical risks a negative effect. • Government support In general, the development of the Chinese • Transparency and stability of regulatory, manufacturing industry has a greater impact tax and economic policy on large manufacturing companies (by 25 pp).
Top-4 factors affecting company development The negative effect of the development of the • Local demand growth Chinese manufacturing industry is higher among • Reduction in production costs (including foreign companies with localised production energy resources) in Russia (by 16 pp). • Availability of financing • Enhancing the production base (launch of new facilities) Positive assessments of the impact of the development of the Chinese manufacturing industry on business are more common among automotive and chemical industry companies (by 26 pp and 20 pp respectively). Rapprochement between Russia and the other BRICS countries has had a positive effect on the development of manufacturing in Russia, according to 70 percent of respondents. Top-4 constraints on the development of Russia's The share of respondents who are optimistic about manufacturing companies: the development of their business as a result of the • Currency risks (rouble depreciation) (39 percent) rapprochement between Russia and the other BRICS • Shortcomings of government regulation countries is slightly higher among representatives (administrative, trade, economic and other barriers) of larger companies (with over RUB 50 billion (35 percent) of annual income) by 5-7 pp. • Geopolitical risks (EU sanctions, Russian embargo, etc.) (29 percent) Chemical industry representatives are less optimistic • Insufficient government support about the rapprochement between Russia and the other and financing (28 percent) BRICS countries: 25 percent of the respondents note negative effects from the development of relationships between Russia and the other BRICS countries. Top-3 effects of rouble devaluation: • Product cost increase (48 percent) • Competitive growth due to outbound sales in a foreign currency (33 percent) • Product cost reduction (25 percent)
*based on the top companies by revenue, RUB bn (source: Expert400 rating) Research Centre market analysis
Manufacturing market in Russia – 2016 Key findings
Top-6 development strategies for companies in 2016: The issue of loan refinancing has lost its significance • Expansion into new markets (75 percent) by 13 pp on the previous year. • Enhancing the production base (launch of new Compared to the other surveyed sectors, the facilities/increase in output) (69 percent) issue of loan refinancing is of greater significance • Business development through organic to manufacturers of metal products (by 19 pp) growth (67 percent) and automotive companies (by 15 pp). • Introducing new products/services onto the market (65 percent) The most attractive type of financing is internal • Investment in staff development (64 percent) financing (66 percent) • Reduction of expenses in Russia (64 percent) Chemical industry representatives and industrial equipment manufacturers are more oriented towards internal financing than other sectors are (88 percent and 83 percent, respectively). Top-4 currency risk management methods: • RUB-denominated loans (35 percent) • Hedging (33 percent) • Insertion of an exchange clause in contracts Top-5 government measures in Russia's manufacturing (fixing prices for finished goods in a currency other sector with a positive effect on business development: than the contract currency) (28 percent) • Innovation support (27 percent) • Establishing reserve funds (inventories, raw materials, • Intellectual property protection laws (27 percent) finished goods and capital) (27 percent) • Subsidiary support (25 percent) • Health and safety policy (21 percent) • Public procurement participation conditions (20 percent)
The attractiveness of Russian investment for business Top-3 government measures in Russia's manufacturing support and development is 21 pp higher than the sector with a negative effect on business development: attractiveness of foreign investment. • Monetary policy of the CBR Automotive companies are more interested in attracting • Energy policy (energy tariffs) external investment than the market average (including • Economic and fiscal policy aircraft engineering and shipbuilding by 15 pp and 20 pp respectively). Top-3 forms of government support for manufacturing companies in Russia Chemical industry representatives are more focused • Tax and other benefits (25 percent) on attracting foreign investment than Russian • Investments in physical infrastructure, grants, investment (by 21 pp). subsidies (20 percent) • Innovation support (17 percent) Companies with long-term strategies for business development (over 5 years) are generally focused on external financing: 76 percent of them plan to attract Russian investment in the near future.
16 Research Centre market analysis
Government support for R&D in Russia
of respondents are developing unique products and 62% technologies, including for subsequent sale.
of companies engage contractors to perform R&D projects, with the 72% majority of them (85 percent) delegating more than half of their work. • Technology and telecommunications companies are less likely to engage third-party companies (by 6 pp).
protect the results of intellectual activity (RIA) in Russia. 59% • The share of such companies in the manufacturing and industrial sector is higher than among representatives of other industries (by 12 pp).
The level of use of R&D government support measures is 37 lower than the level of awareness of them. p.p.
The most well known R&D support tools in Russia include: Top-3 • Russian development institutions (Skolkovo, Rusnano, etc.) – 98% • Financing based on the results of tenders as part of federal programs – 83% • Benefits on insurance premiums – 66%
The most frequently used forms of R&D support in the RF include: Top-3 • Russian development institutions (Skolkovo, Rusnano, etc.) – 75% • Benefits on insurance premiums – 48% • Financing based on the results of tenders as part of federal programs – 32%
18 Research Centre market analysis
Government support for R&D in Russia
of respondents are aware of the opportunity to apply an increased R&D 59% deduction to reduce income tax.
R&D development efficiency growth factors in Russia: • Information transparency with respect to R&D financial support • Formal procedures for obtaining financing • Human resources to manage processes for obtaining federal/regional grants • Access to external sources of capital (monetary grants) • Mechanisms for the release of funds (tax benefits)
The overall level of satisfaction of companies that interact with 31% development institutions
Groups reflecting various levels of efficiency of interaction with development institutions supporting R&D: • Interaction efficiency is higher than average: ––Skolkovo Fund ––Ministry of Education and Science (Minobrnauka) ––Ministry of Industry and Trade (Minpromtorg) ––Rusnano ––Russian Venture Company ––Ministry of Economic Development
• Interaction efficiency is average: ––Russian Science Foundation ––Ministry of Communications and Mass Media (Minkomsvyaz) ––Vnesheconombank
• Interaction efficiency is lower than average: ––Foundation for Prospective Studies ––Ministry of Defence Global wind
TOP NEWS: China and Russia
16.03.2016 PowerChina to participate Sinohydro, a PowerChina subsidiary, will use PowerChina funds to invest in financing the bridge in the construction of a bridge over the Lena River in Yakutia, according to Cheng over the Lena river Shizong, Deputy Director, Eurasia Department, Sinohydro.
16.03.2016 Investor to build a one CR-JenK, a Russo-Chinese company, began work on the first stage of its wood billion ruble wood processing facilities in the Dzhidinsky District, Buryatia. Investment in the joint project processing plant in Buryatia will total RUB one billion.
24.02.2016 Chinese Company Haier Chinese consumer electronics manufacturer Haier is to begin production of televisions to start manufacturing in Tatarstan. The production facilities will be located at the “Master” Kama Industrial televisions in Tatarstan Park in Naberezhnye Chelny, where Haier experts are completing the construction of a factory for the production of refrigerators.
11.02.2016 Chinese investor to start China-Russia Agricultural Development Company will start building a dairy farm near building RUB one billion the city of Tomsk in 2016. The farm will accommodate a milking herd of two thousand farm near Tomsk in 2016 cows. The project’s expected value is one billion rubles. The investor’s short-term plans also include participation in the development of an aquabiocentre fish farm in the Tomsk Region and the construction of greenhouses for vegetable farming. In the long term, the company expects to build a milk powder factory with annual capacity of 50 thousand tonnes and several fodder plants with total capacity of 300 thousand tonnes per year.
09.02.2016 Chinese investors to The construction of a plant producing pharmaceuticals for bees will begin launch a bee medicine in Bashkortostan this summer. The total amount of investment, including plant in Bashkortostan the input of China’s Zhifang, is estimated at 1.5 billion rubles.
05.02.2016 Chinese company to The Primorsky Krai authorities met with a delegation of Dezhong (Beijing) build three large factories EnergySavingTechnologyCo. Ltd from China. The company wants to cooperate with in Primorye the region in a number of areas. As a resident of the Vladivostok Free Port, Dezhong expects to build three large factories – for innovative insulation materials, potable water, and pharmaceuticals.
15.01.2016 Chinese investors to The Etana Clean Polymers Factory and two Chinese state corporations signed build a polymer plant a contract at the government house of the Kabardino-Balkar Republic. in the Kabardino-Balkar The EPC contract was signed by General Director of the Etana Clean Polymers Factory, Republic Sergei Ashinov, Deputy CEO of the China Petroleum Technology and Development Corporation, Yang Wei, and CEO of the China Kunlun Contracting & Engineering Corporation, Zhou Huatang.
According to the terms of the contract, the plant will be constructed in three phases. The first phase, providing a capacity of 500,000 tonnes, will begin operation in 2018, with the following two to be launched in 2019 and 2020.
Source: Invest in Russia
20 Top M&As (Russian companies)
Bidder Seller Deal value* Target company Industry Additional information company company (USD, mln) Taas-Yuriakh Energy & Resources Indian Oil Rosneft Oil 1280 A consortium of Indian Oil Corporation (IOC), Oil India Neftegazodobycha Corporation Company OAO and Bharat PetroResources Limited have agreed to acquire OOO (29.9% (IOC); Oil India a 29.9 percent stake in Taas-Yuriakh Neftegazodobycha Stake) Limited; Bharat OOO (TYNGD), the Russia-based oil and gas exploration PetroResources and production company, from Rosneft Oil Company OAO. Limited Post acquisition, Rosneft will own a 50.1 percent stake in TYNGD. Concurrently, IOC, Oil India and Bharat PetroResources signed a heads of agreement for the acquisition of 23.9 percent in CJSC Vankorneft, an oilfield based in Russia, from Rosneft for USD 2bn. In July 2015, BP plc acquired a 20 percent stake in TYNGD from Rosneft. Additionally, IOC, Oil India and Bharat PetroResources have signed a memorandum of understanding with Rosneft to acquire a 49 percent stake in the Suzunskoye, Tagulskoye and Lodochnoye oil fields. TYNGD currently has a production rate of 20,000 BOE per day. The acquisition is subject to the relevant board, government and regulatory approvals. The deal is expected to be completed by September 2016. JSC Bank Financial Services PJSC 156 The acquisition will enable Bank Sovetsky to recover from Sovetsky Tatfondbank bankruptcy and help Tatfondbank expand its geographic outreach. Tatfondbank’s board of directors has approved the acquisition of Bank Sovetsky. The Central Bank of Russia has appointed the Deposit Insurance Agency (DIA) to handle the financial rehabilitation of Bank Sovetsky. On 23 October 2015, CJSC Bank Sovetsky was placed under provisional administration. Tatfondbank won the bid based on the terms of funding it offered. OJSC Detsky Mir Retail Russia-China Sistema JSFC 133 RCIF considers the deal to be in line with its investment Group (23.1% Investment strategy. Upon completion, Sean Glodek, Deputy CEO of Stake) Fund the RDIF, and Lei Teng, Senior Vice President of the RCIF, will be nominated to the board of directors of Detsky Mir on behalf of RCIF. Detsky Mir’s retail network consists of 425 stores with a total retail space of 504,000 m2. It reported revenues of RUB 59.5 billion for 2015. Formula Kino Technology, Media & CJSC Cinema A1 Investment 67 After the acquisition, Cinema Park and Formula Kino will cinema network Telecommunications Park Company; be merged into one operating company but will continue Vladimir to operate under their own brands. Prior to the acquisition, Zakharov A1 Investment Company held a 75 percent stake in (private Formula Kino and the rest was owned by Vladimir investor) Zakharov. In January 2012, A1 Investment Company acquired a 55.66 percent stake in Formula Kino, for an undisclosed consideration. Agrokombinat Agribusiness Sistema JSFC VTB Bank OAO 41 Agrokombinat Yuzhny has generated total revenues Yuzhny OAO of RUB 2.2 billion in the year 2015. Agrokombinat Yuzhny grows 34,000 tons of vegetables per year.
*open information about deal value Source: Merger market Useful stickers
Rosneft, Bashneft, Alrosa in First Wave of Russian Privatisation Find out more: Alrosa, Rosneft and Bashneft were included in an existing privatisation plan and are already traded on stock markets, making them easiest to sell, said Minister for Economic Development, Alexey Ulyukayev, according to the TASS news agency.
The government's shares in Bashneft and Alrosa combined are worth around RUB 600 billion (USD 7.5 billion) at current market prices, and the proposed sale of a 19.5 percent share in Rosneft could raise a further RUB 500 billion (USD 6.5 billion).
Moody's withdrawing national scale ratings in Russia Russian Regional Investment Climate Index Moody's, the rating agency, will withdraw all of its Russian The Russian Regional Investment Climate Index national scale ratings and shut down its joint venture with evaluates the efforts of the regional authorities Russian media company Interfax. in providing favourable conditions for business and identifies best practices. Its results encourage The company will keep its office in Moscow and competition for investments at the regional level. maintain global scale ratings, which are international creditworthiness comparisons, on Russian entities. Find out more: Find out more:
TOP-100 largest Russian companies by market Results of the fourth Moscow Economic capitalisation – 2016 Forum (MEF) Find out more: Find out more:
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22 Contacts
Joe Pacelli Vladimir Sokolov Partner Research Specialist [email protected] [email protected]
Marina Elovskaya Julia Durnova Senior Manager Research Specialist [email protected] [email protected]
Lora Zemlyanskaya Artyom Belyaev Research Centre Leader Designer [email protected] [email protected]
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