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Russia’s key rail container operator: Abramovich in, Magomedov out

Roman Abramovich, the Russian magnate globally known as the owner of English Premier League football club Chelsea, along with his business partner Aleksandr Abramov, is reportedly acquiring a 24.84% stake in TransContainer (TC), the country’s leading rail container operator, from Russia’s second largest bank, VTB

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In October this year, VTB and Yenisey Capital (EC), which is Abramovich’s and Abramov’s investment vehicle), bought 24.84% and 0.23% respectively in TC from FESCO, the Russian transportation and logistics group operating the Commercial Seaport of Vladivostok (VMTP) among its other assets.

 

During the transaction, VTB reported signing a forward agreement to sell the purchased shares. The lender did not disclose the would-be buyer, price parameters and other details. However, already in November, EC demanded a reshuffling of TC’s Board.

 

Late last year, EC acquired a 24.5% stake in TC from the Blagosostoyaniye pension fund (BPF) affiliated with the state-run monopoly Russian Railways (RZD). In such a way, EC is now about to increase its shareholding in TC to almost 50%.

 

The Russian federal government retains control over TC through Russian Railways RZD, which holds 50 plus 2 shares in the rail container operator, but Moscow has repeatedly declared plans to sell out its package.

Yenisey Capital's stake is now practically 50%
Yenisey Capital's stake is now practically 50%

FESCO’s motives to sell its stake in TC are clear. According to Chairwoman Leyla Mammad-Zada, the company wants to use the funds from the deal to reduce its significant debt burden.

 

In December 2014, FESCO received a repo loan from VTB and provided the bank with its package in TC as collateral. Then, in late 2017, FESCO used the bulk of VTB’s facility of US$680M to pay off to its Eurobond holders. As a result, VTB did not pay for the purchased stake (estimated at around US$230M), having instead written off part of FESCO’s debts.

 

Finally, FESCO is either directly or via its partners controlled by the Summa group owned by embattled Russian billionaire Ziyavudin Magomedov. The latter has been jailed since late March this year and TC has become his second asset taken for debt by VTB.

 

In August, the lender became the owner of 22.25% of the Novorossiysk Bread Products Combine (NKHP), and on August 29, it received permission from the Federal Antimonopoly Service to purchase another 10.93%.

 

Furthermore, in October, Magomedov’s Summa group withdrew from the partnership with the state-run oil company Transneft in controlling Russia’s largest harbour operator Novorossiysk Commercial Seaport (NMTP).

 

Roman Abramovich’s motives are hard to fathom, but earlier this year his UK visa was not renewed, as a fallout from the Sergei and Yulia poisoning outrage, as he has close ties with President Putin. He is able to visit the UK on a Swiss passport, but is been seen less at Chelsea matches these days, despite being a genuine lover of football.

 

He also cancelled a project to extend Chelsea’s Stamford Bridge stadium after planning permission was obtained. However, this may have been because the extra spectator capacity that would have been obtained did not justify the huge cost.

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