Sovcomflot lobbies for IPO

Russia’s largest shipping company, state-owned Sovcomflot, wants the government to float 35 to 40% of its shares to raise up to $300 million. The company?s general director Dmitry Skarga said the company preferred American depositary receipts as a way for listing the company’s stock abroad, which would help the oil transporter expand into gas shipping.

The government is currently preparing Sovcomflot for privatization and is considering four options, i.e. an auction, an auction with investment conditions, selling some shares abroad, or merging the company with another firm. Skarga said the government had asked Sovcomflot’s management to assess the options.

Sovcomflot has a tonnage of 3.2 million tonnes, or 30% of Russia’s cargo fleet, and reported a net profit of $186.4 million last year. Skarga said he favoured leaving a controlling stake of 50% in government hands and considers the New York Stock Exchange the best floor for Sovcomflot shares. “This exchange is best suited for the shipping business,” he said. “All the biggest shipping companies are there.”

Skarga also said that Sovcomflot was considering buying other transportation companies and building new ships. Sovcomflot has $200 million in free cash flow for these ends and Sovcomflot’s priority was to build large-capacity oil tankers and gas carriers.

“The gas market is less volatile than the oil market,” Skarga said. “Gas transportation is more stable because deals are contracted for a long period, for 20 to 25 years.”