Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Deripaska to Pay $1.6Bln For 30% Stake in Strabag

Aluminum mogul Oleg Deripaska will buy a 30 percent stake in Austrian builder Strabag for 1.2 billion euros ($1.6 billion), boosting the clout of Europe's fifth-largest builder in Russia.

The deal, unveiled Wednesday, prompted Strabag chief executive Hans-Peter Haselsteiner to call off an initial public offering of his company a day before it was due to start, stunning his own IPO bankers with what he called a key step for Strabag.

"Whoever is No. 1 in Russia will be No. 1 in Europe," Haselsteiner told journalists at a news conference in Vienna. "Deripaska brings the Russian market to Strabag.

Haselsteiner, a former Austrian lawmaker, said he met Deripaska for the first time three weeks ago, after the businessman had approached him about Strabag. He struck the deal himself without consulting outside advisers.

"At the end of the day it was a gut decision, but I'm feeling very well about it," Haselsteiner said.

"There's no doubt that we could have expanded our business in Russia without him," he added, "but with him it's going to be much easier."

Moscow real estate experts agreed with Haselsteiner's assessment, saying other local developers would face an uphill battle competing against the combined duo of Deripaska and Strabag.

"It was quite a surprise, but I think it was quite logical. ... It is a deal that will allow him to control the quality and timing of the projects," said Yulia Nikulicheva, an associate director at Jones Lang LaSalle.

Deripaska's other real estate investments include the Moscow-based Glavmosstroi construction firm, building materials and real estate development companies. Deripaska also is involved with the planned construction of an Olympic Village in Sochi.

Strabag and Deripaska's companies together will have an annual building volume of about 2 billion euros in Russia, Haselsteiner said.

About one-third of Strabag's building volume of 10.4 billion euros last year came from Eastern Europe, and the company expects this share to grow strongly in the future.

A spokeswoman for Deripaska's Basic Element holding company was unable to comment further, saying Deripaska would give a news conference Thursday in Vienna.

Haselsteiner said Deripaska's Rasperia Trading would buy new Strabag shares issued in a capital increase that had been earmarked for Strabag's IPO, and to a smaller extent, would buy shares from existing shareholders.

It will pay 1.05 billion euros for the new shares, or 42 euros apiece, giving Strabag the fresh equity that it had planned to raise with the IPO.

The existing shareholders will sell about 150 million euros worth of their stakes as well.

Strabag will revisit its IPO plans in the second half of the year, Haselsteiner said. It will then probably offer 27.5 million shares, which at the price Deripaska paid would be worth 1.2 billion euros.

Half of Strabag is owned by Haselsteiner's family, and one-quarter each by insurer Uniqa and cooperative bank Raiffeisen-Holding N?e-Wien. Uniqa said it expected to write up the value of its stake, leading to a book gain of about 140 million euros.

Deripaska, related by marriage to former President Boris Yeltsin, owns $16.8 billion worth of assets, Forbes magazine said. His investment vehicle Basic Element controls the world's largest aluminum producer, United Company RusAl, as well as carmaker GAZ.

Reuters, MT