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. Last Updated: 07/27/2016

Rosprom Sells Controlling Stake in Titanium Firm




One of the high-profile players in the upcoming tender for the Rosneft oil company, Rosprom, has sold its controlling 60 percent stake in a major Russian titanium producer, Avisma.


Analysts say the sale to Austria's Creditanstalt-Grant investment company is clearly in preparation for Rosprom's bid in the long-awaited Rosneft tender.


Rosprom, a holding company that has close ties with Bank Menatep, has a controlling stake in the Yukos Oil Co., and is increasingly focusing its business on oil.


Last Wednesday, it announced an alliance with another oil major, Sibneft, to bid for Rosneft, the last of the major government oil holdings yet to be privatized. It will be the junior partner in the alliance, which is likely to also include a Western investor.


A spokeswoman for the Rosprom-Yukos group on Tuesday confirmed a Reuter's report that quoted the company as saying the sale was part of a reshuffling of its investment portfolio.


"As decided by the board of directors, the company will concentrate its activities on oil production," the spokeswoman said. She said the company was looking to acquire not only extractors but oil refineries and petrochemical companies.


Analysts said Yukos, the second biggest Russian oil holding by output, is short on oil processing companies. This provides a major incentive for bidding in the Rosneft tender, as that would allow it to acquire oil-processing facilities.


Earlier this month, the Rosprom-Yukos group strengthened itself by winning control in Eastern Oil Co. with an estimated $1 billion investment.


Analysts believe the Avisma titanium producer, located in the Perm region, is merely the first enterprise that Rosprom will jettison.


"They will get out of other companies outside the oil sector to get money for the [Rosneft] auction," said Alexander Sokolnikov, an oil analyst at Aton investment company.


According to traders, Avisma's shares are nonliquid and do not trade in the Russian Trading System, but their over-the-counter price is about $100 which makes the stake of 60 percent or 884,532 shares worth $88.43 million.


The government has decided to sell a 75 percent-plus-one-share stake in Rosneft in a single investment tender. Other main bidders are likely to be an alliance of Gazprom, LUKoil and Shell and another consortium of Uneximbank, Sidanko and British Petroleum.