Assets in search: why "big privatization" is back on the agenda
Due to the "big privatization", which Finance Minister Anton Siluanov spoke about on March 18, the authorities will be able to both generate income from the sale and launch the stock market by offering new securities from the most reliable issuers. The minister's statement that it's time to put the issue of state property on the agenda is close to sensational. A little later, his deputy Alexei Moiseev clarified that the agency had already identified seven companies that the authorities were ready to transfer to private hands in 2026. However, he did not say whether it was in whole or in part. Whether the "big privatization" is really relevant and how profitable the offer will be — in the Izvestia article.
Finance Minister announces "big privatization"
In May 2023, at a legal forum in St. Petersburg, she interviewed Deputy Minister Alexei Moiseev and did not fail to ask a question about "big privatization." Moreover, at that time he told so much about the "small" through the sale of property through the marketplace. Then the deputy Finance Minister said that "now this issue is not on the agenda." In general, it was logical, because at that moment our stock market was just getting used to the consequences of sanctions for the world of finance, the state of issuers and other things, and was experiencing the moment of replacing departed foreign investors with domestic ones.
Alexey Moiseev, Deputy Minister of Finance of the Russian Federation
However, at the end of 2023, the head of the Ministry of Finance announced that the agency had prepared a list of 30 large companies with state participation, where its share is more than 50%, for possible partial privatization. That is, it was only a matter of reducing participation, and not a complete transfer into private hands. Interestingly, 30 companies were also discussed on March 18. As Alexey Moiseev told reporters, initially 30 enterprises were included in the list of candidates for privatization, but subsequently "there was a shrinkage" and only seven remained in the final version. According to Moiseev's personal assessment, as a result of this measure, the budget may receive from 100 billion to 300 billion rubles.
Why are the privatization plans being postponed?
The plans for 2023 were implemented in a very stripped-down version. So, in April last year, the state managed to sell 100% of Rosspirtprom shares for 8.3 billion rubles. But at an auction, and not through placement on the stock exchange (this is important, and more on that later), and at a price lower than initially stated (10.6 billion rubles). It is quite obvious that at that time the relevance of the "big privatization" was again pushed back to a longer-term perspective. Inflation prevented it, to combat which the Central Bank began to tighten monetary policy by raising the key interest rate. It would seem, what kind of dependence is there? A straight line.
So, 2024, when, in fact, the plans of the Ministry of Finance were supposed to be implemented, became absolutely outstanding in terms of the promised return on deposits. As a result, over the past year, household funds on deposits increased by almost 12 trillion rubles, to 57.5 trillion. And this increase is explained by the flow of citizens' savings from other instruments to deposits. In general, this is reasonable behavior, since we have never seen such a real return that deposits provided (and continue to do so, despite the reduction in rates), and even with state guarantees.
But let's be honest. Both in the deposit market and in the stock market, the main volumes are made by 2-3% of the largest investors, who account for the majority. The rest of the participants operate with very modest amounts, so they don't make the weather, unless they can arm themselves with an umbrella, following forecasts from wealthier comrades.
However, I recently talked with one of the very important figures in the stock market, and he said that in order to stir up trading, we need public funds. Not on deposits, no. He recalled that individuals have a lot more than $90 billion in their hands, and in the best of times, all of $100 billion. This is about 9 trillion rubles, which are freely available. And this, my interlocutor said, could help the stock market. To become, so to speak, the basis for a big leap.
Another question is who this money belongs to. Is it realistic for the population in its large numbers or, again, for the chosen ones? The problem is that it is very important for the latter to understand the prospects of investing in stocks. That is, the placement price should be comfortable enough for investors to have the opportunity to generate income from growth. And in this sense, high rates also interfere, which may prevent placement at a cost that could compete with deposits.
In addition, in today's realities, those who understand are very confused by the fact that issuing companies may not disclose their financial statements. This significantly affects the valuation of companies, and, as a result, the value of shares. The opaque dividend policy is also worrying. We all remember the story of one of the largest state-owned companies, which first promised to share profits, which caused its shares to soar, then held an intrigue, and in the end decided not to pay anything to shareholders.
How are privatization and the stock market related?
A small lyrical digression on why I and others associate privatization and the stock market. Of course, the Ministry of Finance wants additional revenue to the budget through the sale of shares in state-owned companies. But if you look at Alexey Moiseev's assessment of the proceeds from possible privatization, they are very comparable to what the state receives from dividends. But at the same time, the agency is tasked with executing instructions to increase the capitalization of the stock market to 66% of GDP by 2030. Taking into account the growth of gross domestic product over the same period, this means an increase in this capitalization by almost three times — to 193 trillion rubles. Therefore, privatization will definitely be carried out through the placement of shares on the stock exchange. Which, by the way, follows from Anton Siluanov's speech on March 18. He recalled the task set by the president to double the capitalization of the stock market by 2030.
Russian Finance Minister Anton Siluanov speaks at the XXXIV Congress of the Russian Union of Industrialists and Entrepreneurs
In this sense, the state can kill two birds with one stone: both to receive income from sales and to start the stock market by offering new securities from the most reliable issuers. But the main thing is to calculate it correctly. After all, if there is no demand, then you can lose, especially considering that the budget will lose part of the dividends.
I asked the opinion of another reputable participant in the stock market, what he thinks about this, whether the state will make any sacrifices to add enthusiasm to the stock exchanges. He said it was doubtful that the authorities would sell their assets at a loss.
— The statement of the head of the Ministry of Finance does not entail any obligations. No one will sell to their own detriment. Siluanov declared a new stage of privatization for 2026. At that time, the rates will decrease, and they will "wait for the window" (the expression of the head of Sberbank, German Gref, when it was announced the sale of part of the bank's shares. — Ed.). If I may say so, he said that we are starting KVN, and how it will continue depends on many conditions," said my interlocutor.
By the way, in May 2023, during an interview at the SPIEF, Alexey Moiseev told me that the Ministry of Finance "does not have the task of simply distributing state property as quickly as possible." He noted that the president had set the task of forming a domestic retail investment market. That's why the government has launched a long-term savings program and an AIS reform. In general, "we will wait for the window."
Переведено сервисом «Яндекс Переводчик»
