Clifford Chance
Privatisation in Russia - what's in store for international investors?
29 March 2011
Russia is looking to international investors to play a leading role in its ambitious privatisation programme. It plans to raise at least US$50 billion over the next five years from selling stakes in state enterprises.
Although Russia has earmarked approximately 5,500 organisations for potential privatisation, only 10 enterprises have so far been submitted to Parliament and approved for first sale.
The privatisation programme is likely to be a controversial move. There is hostility among some Russians towards selling state-owned enterprises because of the troubled privatisations of the 1990s.However, the government is pressing ahead with the sales principally to bolster its revenues and to safeguard economic stability.
The government also intends to use the privatisation process to overhaul and modernise the infrastructure and the management of these businesses.
The privatisation programme may face challenges from certain entrenched political and economic interests within Russia including the existing management bodies of some of these state-owned enterprises which may try to resist any dilution in their control.
One of crucial issues facing Russia's privatisation programme will be the way in which the government deals with these types of potential obstacles. Another issue will be how successfully it addresses investors' concerns in areas such as improving the corporate governance structures and processes of these state enterprises.
Clifford Chance webinar on Russia
To view Clifford Chance's webinar, Global M&A – How Russia is emerging from the downturn, go to http://www.cliffordchance.com/newsandevents/webinars/russia.html
