Russia opens up Gazprom ownership
Government allows overseas investors to own more than 20% of gas monopoly once it takes control.
September 28, 2004: 8:19 AM EDT
MOSCOW (Reuters) - Russia will allow foreigners to own more than 20 percent of gas monopoly Gazprom once it acquires a controlling stake in the company, Russia's deputy prime minister said Tuesday.
"The restrictions will be removed. That's why we're doing this. What's the point of keeping restrictions when the state has a controlling stake?" Deputy Premier Alexander Zhukov told reporters during a Brunswick UBS conference in Moscow.
Investors have said a full liberalization of Gazprom's share trading would turn the firm into a must-own stock in all emerging markets portfolios, while the market capitalization of the world's largest gas producer could double to $100 billion.
Moscow announced earlier this month it would be swapping state oil firm Rosneft for enough shares in Gazprom to take direct control of the company -- a prerequisite for the removal of a block on foreigners owning Gazprom's local shares.
At the moment non-Russians can only own Gazprom's American depositary shares (ADS), which trade in London at a premium to ruble-priced ordinaries. Foreigners are currently banned from owning more than 20 percent of Gazprom.
Officials have already said the merger would mean an end to the ring fence around ordinary shares, but confusion remained as to whether they would still limit the amount of share capital that could be held by foreigners.
In return for Rosneft, Russia's government will boost its current 38.37 percent direct stake in Gazprom with treasury shares held by Gazprom subsidiaries.
Gazprom's ordinary shares were trading 1 percent higher at 75 rubles, while its ADSs were up 2.2 percent at $37.30.
Independent consultant due
The deputy head of Gazprom's finance and economics department, Sergei Yatsenko, told the conference Gazprom would hire an independent consultant to value the assets of Gazprom and Rosneft, which are due to merge by the year end.
Gazprom Chief Executive Alexei Miller has said he believes the state's 100 percent stake in Rosneft would be swapped for around 10.7 percent of Gazprom treasury shares -- valuing Rosneft at around $5 to $6 billion.
"I think a reputable valuation firm will be hired," said Yatsenko. "There will be an independent valuation and I believe the swap would be fair."
The merger is being closely watched not only by Gazprom's own minority shareholders, but also by investors in Rosneft's oil units, Purneftegaz and Sakhalinmorneftegaz.
Russian daily Vedomosti reported that Gazprom had worked out a plan to avoid $1 billion in profit tax it would have to pay for the deal as a result of the $4.2 billion increase in those shares' value since they were transferred to its subsidiaries.
"(The scheme) will allow (Gazprom and the government) to do everything legally and transparently, and minimize taxes," the source told Vedomosti.
Vedomosti quoted a Kremlin administration source as saying that it had given outline approval to the scheme, although details were still under discussion.
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