Russia through
a lens
Deloitte Research Centre
Second issue, 1Q 2016
Content
1. Russia in figures
2. Research Centre
market analysis
3. Global wind
4. Top M&As
We are pleased to present the latest
edition of Russia Through a Lens, the
macroeconomic journal produced by the
Deloitte Research Centre in Moscow.
Established in December 2015, the journal
is published quarterly and falls under the
Research Centre’s monitoring activities.
In Russia Through a Lens, we focus on
current key trends in the Russian economy
and present our research in the following
fields:
•Russia in Figures – statistical analysis
•Research Centre market analysis
•Top M&As
If you have any questions or suggestions
regarding this research, please do not
hesitate to contact us:
[email protected]
Designed by the Deloitte Design Group, Moscow
Russia in figures
GDP
GDP, bln RUB
150, 000.0
50%
25%
130, 000.0
110, 000.0
24%
24%
8.5%
8.2%
5.2%
29%
19%
-6%
12%
4.3%
4.5%
3.5%
-7.8%
90, 000.0
70, 000.0
59,698.1
50, 000.0
30, 000.0 21,609.8 21,609.8
33,247.5
41,276.8 38,807.2
30%
10%
6%
1.3%
4%
0.7%
66,926.9 71,016.7
-10%
-3.7%
77,945.1 80,804.3 80,157.9 -30%
-50%
-70%
46,308.5
-90%
-110%
10, 000.0
-130%
-10, 000.0
-150%
2005
2006
2007
2008
2009
Source: Rosstat, Ministry of Economic
Development (forecast)
2010
2011
GDP, bln RUB
The data for the period from 2011 includes changes
related to the implementation of the international
methodology for housing services evaluation;
to the evaluation of capital consumption, taking
into account its current market value; to the
conformation of data on exports and imports with
2012
2013
2014
16,000
14,925.0
GDP volume indices
15,891.7
17,138.9
18,209.7
16,233.5
12,844.3
12,000
8,877.7
10,000
6,000
2016F
the data presented in the balance of payments
developed according to the methodology provided
by the Sixth Edition of the Balance of Payments and
International Investment Position Manual (BPM6)
introduced by the International Monetary Fund.
18,000
14,000
2015
GDP growth (at current prices)
Q1 GDP, bln RUB
8,000
10%
-0.8%
5,792.9
9,995.8
8,334.6
6,780.2
4,000
2,000
0.0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016F*
* Central Bank preliminary estimate
Forecasts:
2016
4
Ministry of
Economic
Development
Central Bank
Standard &
Poors
A. Kudrin,
ex-Minister
of Finance
Gaidar Institute
-0.8%
-1%
-1.3%
-1% to +0.5%
-2%
Russia in figures
Inflation
Inflation, %
14.0
12.94
13.3
12.0
12.2
11.9
11.4
10.0
8.8
9.0
8.8
8.0
6.1
6.0
6.6
7.5
6.5
6.0
6
4.0
4
6.5
4
2.0
0.0
2005
2006
2007
2008
2009
2010
2011
2012
2013
Ministry of Economic Development (forecast)
2014*
2015
2016
2017
Central Bank (forecast)
Forecasts:
Source
2016
International Monetary Fund
9.8%
World Bank
8%
Gaidar Institute
6.5–7.0%
Gaidar Institute (Consumer Price Index)
7.7%
Inflation in March in 2016:7.4%-7.6%*
Inflation target in 2017: 4%**
*The inflation figure is the consumer price growth rate over the corresponding month of the previous year.
**The inflation target is set for the consumer price growth rate over the corresponding month of the previous year (Central Bank).
2018
Fact
Russia in figures
Trade structure
Period Jan-Dec 2015
•Foreign trade turnover: USD 530.4 billion (-33.2 percent YoY)
•Trade balance: surplus of USD 161.4 billion (-USD 48.9 billion YoY)
•Exports: USD 345.9 billion (-31.1 percent YoY)
•Imports: USD 184.5 billion (-36.7 percent YoY)
Imports from non-CIS countries (period Jan-Dec 2015):
Percentage in Imports to
in monetary terms
non-CIS
in physical terms
categories
Textiles and footwear
6.0%
-34.2%
-27.1%
Metal products
5.6%
-36.8%
-30.1% • pipes (-33.5%)
• flat rolled products of iron
or non-alloy steel (-40%)
19.1%
-27.6%
• cosmetic products (-15.4%)
-15.0% • plastics (-25.7%)
• rubber (-21.8%)
48%
-39.4%
• optical instruments and
apparatus (-35%)
• mechanical equipment
(-33.1%)
n/a
• electrical equipment
(-36.5%)
• cars (-49.9%)
• trucks (-65.9%)
13.7%
-35.0%
Chemical products
Machinery and auto
Food and raw
materials for their
production
-20.5%
Imports from CIS countries (period Jan-Dec 2015):
in monetary terms
Energy products
10.2%
-24.1%
Metal products
12.5%
-47.1%
Chemical products
14.9%
-19.0%
Machinery and auto
Food and raw
materials for their
production
Textiles and footwear
Source: Federal Customs Service
6
20.2%
-49.3%
in physical terms
categories
-8.8%
• pipes (-44.8%)
-27.7% • flat rolled products of iron
or non-alloy steel (-4.6%)
-5.6%
• products of inorganic
chemistry (-1.4%)
• plastics (-6%)
• rubber (-27.3%)
• mechanical equipment
(-51.2%)
• electrical equipment
(-54.7%)
n/a
• optical instruments and
apparatus (-45.4%)
• cars (-58.6%)
• trucks (-9.3%)
20.6%
12.4%
• meat (34.7%)
• butter (13.8%)
n/a • cheese (19.4%)
• milk (-9.5%)
• fish (-14.9%)
5.7
-29.2%
1.3% cotton cloth (1.5%)
Russia in figures
Trade structure
Exports to non-CIS countries (period Jan-Dec 2015):
Percentage in
Exports to non-CIS
Energy products
Metal products
in monetary terms
66.4%
9.4%
in physical terms
categories
-37.7%
• crude oil (11.2%)
6.3% • oil products (4.9%)
• natural gas (14.7%)
-16.6%
• ferrous metals (8.4%)
• cast iron (24.2%)
9.3% • semi-finished products of
iron or non-alloy steel (7.9%)
• ferroalloys (-16.1%)
• products of inorganic
chemistry (11.6%)
3.6% • fertilizers (1.7%)
• plastics (22%)
• rubber (18.4%)
Chemical products
6.5%
-12.4%
Machinery and auto
6.0%
12.9%
n/a
• cars (69.2%)
• trucks (6.3%)
Food and raw
materials for their
production
4.0%
13.6%
n/a
• barley (35.5%)
• milk and cream (11.7%)
Timber, pulp and
paper products
2.7%
-9.8%
n/a
• lumber (20.8%)
• plywood (16.8%)
• cellulose (10.7%)
• rough wood (-7.5%)
Exports to CIS countries (period Jan-Dec 2015):
in monetary terms
Energy products
Metal products
39.5
10.7
-36.5%
in physical terms
categories
• crude oil (-5.2%)
-5.5% • oil products (-13.6%)
• natural gas (-15.2%)
-27.1%
• semi-finished products
of iron or non-alloy steel
5.2%
(34.5%)
• flat rolled products of iron or
non-alloy steel (-15%)
Chemical products
13.4
-16.0%
• pharmaceuticals (16.5%)
• paints and varnishes (120%)
n/a • plastics (12.4%)
• nitrogen fertilizers (-27.3%)
• cosmetic products (-9.1%)
Machinery and auto
16.4
-29.5%
n/a
Food and raw
materials for their
production
9.4
-17.9%
9.1%
Timber, pulp and
paper products
3.8
-35.5%
-10.1%
Source: Federal Customs Service
• mechanical equipment
(-16.9%)
• electrical equipment
(-33.2%)
• pork (530.0%)
• wheat (50.2%)
• lumber (-16.8%)
• plywood (-17.5%)
• newsprint (-19.3%)
• cellulose (4.2%)
Russia in figures
Currency rate
RUB vs. EUR and USD, 1 January 2014 – 1 April 2016
100
90
80
70
60
50
40
30
20
10
Source: Central Bank
EUR-RUB
90.00
80.00
70.00
USD-RUB
19%
+16% 82.53
71.02
+18%
78.13
+17%
74.73
65.41
63.19
70.36
60.36
60.00
50.00
40.00
30.00
20.00
10.00
0.00
Q1 2015
Q1 2016
March
2015
Source: Central Bank
March
2016
Q1 2015
Q1 2016
March
2015
March
2016
USD-RUB forecasts (average per year)
8
Ministry of Economic
Development
Gaidar Institute
Apecon (Economic
Forecasting Agency)
2016
RUB 63.5
RUB 62.2
N/A
2017
N/A
RUB 65.7
RUB 79.44
1-Apr-16
1-Mar-16
1-Jan-16
1-Feb-16
1-Dec-15
1-Oct-15
1-Nov-15
1-Sep-15
1-Aug-15
1-Jul-15
1-Jun-15
1-Jun-15
1-May-15
1-Apr-15
1-Mar-15
1-Jan-15
1-Feb-15
1-Dec-14
1-Oct-14
1-Nov-14
1-Sep-14
1-Jul-14
1-Aug-14
1-Jun-14
1-Apr-14
1-May-14
1-Mar-14
1-Jan-14
1-Feb-14
0
Russia in figures
Central Bank key rate
Central Bank Key Rate, %
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
29-Feb-16
31-Mar-16
31-Jan-16
31-Dec-15
31-Oct-15
30-Nov-15
30-Sep-15
31-Jul-15
31-Aug-15
30-Jun-15
31-May-15
30-Apr-15
31-Mar-15
31-Jan-15
28-Feb-15
31-Dec-14
31-Oct-14
30-Nov-14
30-Sep-14
31-Aug-14
31-Jul-14
30-Jun-14
30-Apr-14
31-May-14
31-Mar-14
31-Jan-14
28-Feb-14
0
Source: Central Bank
The refinancing rate is 11 percent (from 1 January 2016).
In accordance with a decision of the Board of Directors of
the Bank of Russia, effective 1 January 2016, the value of
the refinancing rate of the Central Bank of Russia will be
equal to the key rate of the Central Bank of Russia set at
the respective date.
From 1 January 2016, the Central Bank of Russia will not
set a separate value for the refinancing rate of the Central
Bank of Russia.
Russia in figures
Top-pricing (Nickel)
Nickel
Maximum for the period
21,000
19,250
19,000
18,325
19,040 18,800
18,505
17,000
16,265
15,911
14,677
13,980
15,000
13,000
16,275
15,150 15,165
14,095
15,740
13,950
12,600
12,395
12,015
12 years minimum
11,040 10,330
10,045
10,060
8,855 8,820 8,610 8,530
8,485
11,000
9,000
1-Apr-16
1-Mar-16
1-Jan-16
1-Feb-16
1-Dec-15
1-Oct-15
1-Nov-15
1-Sep-15
1-Jul-15
1-Aug-15
1-Jun-15
1-Apr-15
1-May-15
1-Feb-15
1-Mar-15
1-Jan-15
1-Dec-14
1-Oct-14
1-Nov-14
1-Sep-14
1-Jul-14
1-Aug-14
1-Jun-14
1-Apr-14
1-May-14
1-Mar-14
1-Jan-14
1-Feb-14
7,000
Nikel, LME, $/t
Forecasts:
Nickel
10
Source
2016
Goldman Sachs
USD 14,500
Morgan Stanley
USD 10,692
Russia in figures
Top-pricing (Oil, gas)
Brent oil, natural gas
Maximum for the period
6
109 108 108 109 112
106
106 103
4.8
95
100 4.9 4.6
4.6
4.4
4.4
85 4.0
4.0 4.1
80
3.9 68
3.8
120
5
5
4
58
60
2.9
40
20
62
55
67 65
63
Minimum for
the period
4
37 40 40
3
53
52 53 48 50
45
38 36
2.7 2.7 2.7 2.7 2.6 2.8 2.7 2.7
2.5
2.3 2.3 2.4 2.2
1.992 1.959
1.7
2
2
Source: Holding "Finam"
Brent Crude Oil, ICE, $/bbl
1-Apr-16
1-Mar-16
1-Jan-16
1-Feb-16
1-Dec-15
1-Nov-15
1-Oct-15
1-Sep-15
1-Jul-15
1-Aug-15
1-Jun-15
1-Apr-15
1-May-15
1-Mar-15
1-Jan-15
1-Feb-15
1-Dec-14
1-Oct-14
1-Nov-14
1-Sep-14
1-Aug-14
1-Jul-14
1-Jun-14
1-Apr-14
1-May-14
1-Mar-14
1-Jan-14
1
1-Feb-14
0
3
Natural Gas, NYMEX, $/mmbtu
Forecasts:
Natural gas
Source
2016
U.S. Energy Information Administration
USD 2.65
Standard & Poors
USD 3
Crude oil
Source
2016
2017
U.S. Energy Information
Administration
USD 34
USD 40
World Bank
USD 37
Central Bank of the Russian
Federation
Ministry of Economic
Development
Standard & Poors
Base scenario: USD 50
Risk forecast: less than USD 40
Conservative scenario: USD 40
Base and target scenario:
USD 50
Base and target scenario:
USD 52
Base and target scenario:
USD 55
USD 40
USD 45
USD 50
Pessimistic scenario: USD 40
Gaidar Institute
2018
Base scenario: USD 55
Optimistic scenario: USD 70
Russia in figures
Top-pricing (Gold, aluminium)
Gold and aluminium
2,300
Maximum for the period
2,097
2,100
1,900
1,700
1,706
1,754
2,037
2,014
1,988
1,920
1,864
1,950
1,891
1,815
1,829
1,853
1,785
1,800
1,740
1,784
1,500
1,329
1,300
1,100
1,246
1,691
1,605
1,572
1,620
Minimum for the period
1,501
1,572 1,541
1,501
1,521
1,481 1,449
1,328
1,289
1,284
1,288
1,285 1,251
1,192
1,187
1,284
1,207
1,183
1,245 1,235
1,174 1,142 1,142
1,214 1,182
1,122
1,174 1,151
1,095 1,114 1,071 1,061
Source: Holding "Finam"
Gold, COMEX, $/t oz
1-Apr-16
1-Mar-16
1-Jan-16
1-Feb-16
1-Dec-15
1-Oct-15
1-Nov-15
1-Sep-15
1-Jul-15
1-Aug-15
1-Jun-15
1-Apr-15
1-May-15
1-Feb-15
1-Mar-15
1-Jan-15
1-Dec-14
1-Oct-14
1-Nov-14
1-Sep-14
1-Jul-14
1-Aug-14
1-Jun-14
1-Apr-14
1-May-14
1-Mar-14
1-Jan-14
1-Feb-14
900
Aluminium, LME, $/t
Forecasts:
Gold
Source
2016
JP Morgan
USD 1,040
ABN Amro
USD 800
HSBC
USD 1,250
Aluminium
12
Source
2016
2017
2018
Goldman Sachs Group
USD 1,525
USD 1,625
USD 1,700
Research Centre
market analysis
Manufacturing market in Russia – 2016
Key findings
Our analysis shows that in early 2016, the overall
condition of the manufacturing sector in Russia has
been characterised by inequality in the business
environment. This is reflected in the divergence
of opinion among our respondents: whereas 50
percent of the respondents have negative views
on the current market conditions, the other 50
percent of the respondents find them quite favourable
for further business development.
It should be noted that in view of the current conditions,
foreign companies with localised production as well
as manufacturers of metal and engineering products
are experiencing more difficulties (the share of negative
views has increased by 27 pp and 17 pp, respectively).
The opposite trend can be observed among
representatives of smaller companies (with up to RUB
10 billion of annual income) – the share of positive
views on the current market situation has increased
by 20 pp.
In general, the current state of the manufacturing
sector in Russia may be described as positive: the total
positive response rate is 76 percent.
The lion's share of negative assessments of the
companies' current positions relates to industrial
equipment manufacturers (33 percent).
Large companies (with at least 1,000 employees)
are more concerned about challenges facing today's
business environment than smaller companies (by 10 pp).
The expectations of participants in the manufacturing
sector with respect to the prospects for the sector
in 2016 are quite positive: 57 percent of the
respondents expect improvements or no changes.
Companies in the chemical industry and companies
with a total income from RUB 10 to 50 billion are more
optimistic about improvements in 2016 (by 12 pp
and 9 pp, respectively).
The opposite trend can be observed among
manufacturers of metal products (the share of negative
expectations has increased by 14 pp) and foreign
companies with localised production (the share
of negative expectations has increased by 6 pp).
The expectations of participants in the manufacturing
sector with respect to the prospects for their
businesses in 2016 are very positive: 83 percent
of the respondents expect improvements or no
changes for their companies, provided the current
positive assessment of the market conditions.
The share of positive expectations with respect
to prospects for their businesses in 2016 is significantly
higher among chemical industry representatives
(by 22 pp) and companies with a total income from
RUB 10 to 50 billion (37 percent).
Mechanical engineering companies (including aircraft
engineering and shipbuilding) appear to be less
optimistic in their expectations: the share of such
companies expecting business development conditions
to worsen is 10 pp higher than the average.
Pessimistic views are also more common among foreign
companies with localised production in Russia than
Russian companies (by 14 pp).
14
Research Centre
market analysis
Manufacturing market in Russia – 2016
Key findings
Top-5 factors affecting market development
•Reduction in currency risks
•Availability of financing
•Reduction in geopolitical risks
•Government support
•Transparency and stability of regulatory,
tax and economic policy
The development of Chinese manufacturing affects
68 percent of manufacturing representatives
in Russia and 56 percent of companies note
a negative effect.
In general, the development of the Chinese
manufacturing industry has a greater impact
on large manufacturing companies (by 25 pp).
Top-4 factors affecting company development
•Local demand growth
•Reduction in production costs (including
energy resources)
•Availability of financing
•Enhancing the production base (launch of new facilities)
The negative effect of the development of the
Chinese manufacturing industry is higher among
foreign companies with localised production
in Russia (by 16 pp).
Positive assessments of the impact of the development
of the Chinese manufacturing industry on business
are more common among automotive and chemical
industry companies (by 26 pp and 20 pp respectively).
Rapprochement between Russia and the other BRICS
countries has had a positive effect on the development
of manufacturing in Russia, according to 70 percent
of respondents.
Top-4 constraints on the development of Russia's
The share of respondents who are optimistic about
manufacturing companies:
the development of their business as a result of the
•Currency risks (rouble depreciation) (39 percent)
rapprochement between Russia and the other BRICS
•Shortcomings of government regulation
countries is slightly higher among representatives
(administrative, trade, economic and other barriers)
of larger companies (with over RUB 50 billion
(35 percent)
of annual income) by 5-7 pp.
•Geopolitical risks (EU sanctions,
Russian embargo, etc.) (29 percent)
Chemical industry representatives are less optimistic
•Insufficient government support
about the rapprochement between Russia and the other
and financing (28 percent)
BRICS countries: 25 percent of the respondents note
negative effects from the development of relationships
between Russia and the other BRICS countries.
Top-3 effects of rouble devaluation:
•Product cost increase (48 percent)
•Competitive growth due to outbound sales
in a foreign currency (33 percent)
•Product cost reduction (25 percent)
*based on the top companies by revenue, RUB bn (source: Expert400 rating)
Research Centre
market analysis
Manufacturing market in Russia – 2016
Key findings
Top-6 development strategies for companies in 2016:
•Expansion into new markets (75 percent)
•Enhancing the production base (launch of new
facilities/increase in output) (69 percent)
•Business development through organic
growth (67 percent)
•Introducing new products/services onto
the market (65 percent)
•Investment in staff development (64 percent)
•Reduction of expenses in Russia (64 percent)
Top-4 currency risk management methods:
•RUB-denominated loans (35 percent)
•Hedging (33 percent)
•Insertion of an exchange clause in contracts
(fixing prices for finished goods in a currency other
than the contract currency) (28 percent)
•Establishing reserve funds (inventories, raw materials,
finished goods and capital) (27 percent)
The attractiveness of Russian investment for business
support and development is 21 pp higher than the
attractiveness of foreign investment.
Automotive companies are more interested in attracting
external investment than the market average (including
aircraft engineering and shipbuilding by 15 pp
and 20 pp respectively).
Chemical industry representatives are more focused
on attracting foreign investment than Russian
investment (by 21 pp).
Companies with long-term strategies for business
development (over 5 years) are generally focused
on external financing: 76 percent of them plan
to attract Russian investment in the near future.
16
The issue of loan refinancing has lost its significance
by 13 pp on the previous year.
Compared to the other surveyed sectors, the
issue of loan refinancing is of greater significance
to manufacturers of metal products (by 19 pp)
and automotive companies (by 15 pp).
The most attractive type of financing is internal
financing (66 percent)
Chemical industry representatives and industrial
equipment manufacturers are more oriented towards
internal financing than other sectors are (88 percent
and 83 percent, respectively).
Top-5 government measures in Russia's manufacturing
sector with a positive effect on business development:
•Innovation support (27 percent)
•Intellectual property protection laws (27 percent)
•Subsidiary support (25 percent)
•Health and safety policy (21 percent)
•Public procurement participation conditions (20 percent)
Top-3 government measures in Russia's manufacturing
sector with a negative effect on business development:
•Monetary policy of the CBR
•Energy policy (energy tariffs)
•Economic and fiscal policy
Top-3 forms of government support for manufacturing
companies in Russia
•Tax and other benefits (25 percent)
•Investments in physical infrastructure, grants,
subsidies (20 percent)
•Innovation support (17 percent)
Research Centre
market analysis
Government support for R&D in Russia
62%
72%
of companies engage contractors to perform R&D projects, with the
majority of them (85 percent) delegating more than half of their work.
•Technology and telecommunications companies are less likely to engage
third-party companies (by 6 pp).
59%
protect the results of intellectual activity (RIA) in Russia.
•The share of such companies in the manufacturing and industrial sector
is higher than among representatives of other industries (by 12 pp).
37
p.p.
18
of respondents are developing unique products and
technologies, including for subsequent sale.
The level of use of R&D government support measures is
lower than the level of awareness of them.
Top-3
The most well known R&D support tools in Russia include:
•Russian development institutions (Skolkovo, Rusnano, etc.) – 98%
•Financing based on the results of tenders as part of federal programs – 83%
•Benefits on insurance premiums – 66%
Top-3
The most frequently used forms of R&D support in the RF include:
•Russian development institutions (Skolkovo, Rusnano, etc.) – 75%
•Benefits on insurance premiums – 48%
•Financing based on the results of tenders as part of federal programs – 32%
Research Centre
market analysis
Government support for R&D in Russia
59%
of respondents are aware of the opportunity to apply an increased R&D
deduction to reduce income tax.
R&D development efficiency growth factors in Russia:
•Information transparency with respect to R&D financial support
•Formal procedures for obtaining financing
•Human resources to manage processes for obtaining federal/regional grants
•Access to external sources of capital (monetary grants)
•Mechanisms for the release of funds (tax benefits)
31%
The overall level of satisfaction of companies that interact with
development institutions
Groups reflecting various levels of efficiency of interaction with development
institutions supporting R&D:
•Interaction efficiency is higher than average:
––Skolkovo Fund
––Ministry of Education and Science (Minobrnauka)
––Ministry of Industry and Trade (Minpromtorg)
––Rusnano
––Russian Venture Company
––Ministry of Economic Development
•Interaction efficiency is average:
––Russian Science Foundation
––Ministry of Communications and Mass Media (Minkomsvyaz)
––Vnesheconombank
•Interaction efficiency is lower than average:
––Foundation for Prospective Studies
––Ministry of Defence
Global wind
TOP NEWS: China and Russia
16.03.2016
PowerChina to participate
in financing the bridge
over the Lena river
Sinohydro, a PowerChina subsidiary, will use PowerChina funds to invest
in the construction of a bridge over the Lena River in Yakutia, according to Cheng
Shizong, Deputy Director, Eurasia Department, Sinohydro.
16.03.2016
Investor to build a one
CR-JenK, a Russo-Chinese company, began work on the first stage of its wood
billion ruble wood
processing facilities in the Dzhidinsky District, Buryatia. Investment in the joint project
processing plant in Buryatia will total RUB one billion.
24.02.2016
Chinese Company Haier
to start manufacturing
televisions in Tatarstan
11.02.2016
Chinese investor to start
building RUB one billion
farm near Tomsk in 2016
Chinese consumer electronics manufacturer Haier is to begin production of televisions
in Tatarstan. The production facilities will be located at the “Master” Kama Industrial
Park in Naberezhnye Chelny, where Haier experts are completing the construction
of a factory for the production of refrigerators.
China-Russia Agricultural Development Company will start building a dairy farm near
the city of Tomsk in 2016. The farm will accommodate a milking herd of two thousand
cows. The project’s expected value is one billion rubles.
The investor’s short-term plans also include participation in the development of an
aquabiocentre fish farm in the Tomsk Region and the construction of greenhouses
for vegetable farming. In the long term, the company expects to build a milk powder
factory with annual capacity of 50 thousand tonnes and several fodder plants with
total capacity of 300 thousand tonnes per year.
09.02.2016
Chinese investors to
launch a bee medicine
plant in Bashkortostan
05.02.2016
Chinese company to
build three large factories
in Primorye
15.01.2016
Chinese investors to
build a polymer plant
in the Kabardino-Balkar
Republic
The construction of a plant producing pharmaceuticals for bees will begin
in Bashkortostan this summer. The total amount of investment, including
the input of China’s Zhifang, is estimated at 1.5 billion rubles.
The Primorsky Krai authorities met with a delegation of Dezhong (Beijing)
EnergySavingTechnologyCo. Ltd from China. The company wants to cooperate with
the region in a number of areas. As a resident of the Vladivostok Free Port, Dezhong
expects to build three large factories – for innovative insulation materials, potable
water, and pharmaceuticals.
The Etana Clean Polymers Factory and two Chinese state corporations signed
a contract at the government house of the Kabardino-Balkar Republic.
The EPC contract was signed by General Director of the Etana Clean Polymers Factory,
Sergei Ashinov, Deputy CEO of the China Petroleum Technology and Development
Corporation, Yang Wei, and CEO of the China Kunlun Contracting & Engineering
Corporation, Zhou Huatang.
According to the terms of the contract, the plant will be constructed in three phases.
The first phase, providing a capacity of 500,000 tonnes, will begin operation in 2018,
with the following two to be launched in 2019 and 2020.
Source: Invest in Russia
20
Top M&As
(Russian companies)
Target company
Industry
Taas-Yuriakh
Neftegazodobycha
OOO (29.9%
Stake)
Energy & Resources
Bidder
company
Seller
company
Deal value*
Additional information
(USD, mln)
Indian Oil
Corporation
(IOC); Oil India
Limited; Bharat
PetroResources
Limited
Rosneft Oil
Company OAO
1280
A consortium of Indian Oil Corporation (IOC), Oil India
and Bharat PetroResources Limited have agreed to acquire
a 29.9 percent stake in Taas-Yuriakh Neftegazodobycha
OOO (TYNGD), the Russia-based oil and gas exploration
and production company, from Rosneft Oil Company OAO.
Post acquisition, Rosneft will own a 50.1 percent stake
in TYNGD. Concurrently, IOC, Oil India and Bharat
PetroResources signed a heads of agreement for the
acquisition of 23.9 percent in CJSC Vankorneft, an oilfield
based in Russia, from Rosneft for USD 2bn. In July 2015,
BP plc acquired a 20 percent stake in TYNGD from Rosneft.
Additionally, IOC, Oil India and Bharat PetroResources have
signed a memorandum of understanding with Rosneft
to acquire a 49 percent stake in the Suzunskoye, Tagulskoye
and Lodochnoye oil fields.
TYNGD currently has a production rate of 20,000 BOE
per day. The acquisition is subject to the relevant board,
government and regulatory approvals. The deal is expected
to be completed by September 2016.
JSC Bank
Sovetsky
Financial Services
PJSC
Tatfondbank
OJSC Detsky Mir
Group (23.1%
Stake)
Retail
Russia-China
Investment
Fund
Formula Kino
cinema network
Technology, Media &
Telecommunications
Agrokombinat
Yuzhny OAO
Agribusiness
*open information about deal value
Source: Merger market
156
The acquisition will enable Bank Sovetsky to recover from
bankruptcy and help Tatfondbank expand its geographic
outreach. Tatfondbank’s board of directors has approved
the acquisition of Bank Sovetsky. The Central Bank of
Russia has appointed the Deposit Insurance Agency (DIA)
to handle the financial rehabilitation of Bank Sovetsky. On
23 October 2015, CJSC Bank Sovetsky was placed under
provisional administration. Tatfondbank won the bid based
on the terms of funding it offered.
Sistema JSFC
133
RCIF considers the deal to be in line with its investment
strategy. Upon completion, Sean Glodek, Deputy CEO of
the RDIF, and Lei Teng, Senior Vice President of the RCIF,
will be nominated to the board of directors of Detsky Mir
on behalf of RCIF. Detsky Mir’s retail network consists
of 425 stores with a total retail space of 504,000 m2.
It reported revenues of RUB 59.5 billion for 2015.
CJSC Cinema
Park
A1 Investment
Company;
Vladimir
Zakharov
(private
investor)
67
After the acquisition, Cinema Park and Formula Kino will
be merged into one operating company but will continue
to operate under their own brands. Prior to the acquisition,
A1 Investment Company held a 75 percent stake in
Formula Kino and the rest was owned by Vladimir
Zakharov. In January 2012, A1 Investment Company
acquired a 55.66 percent stake in Formula Kino, for an
undisclosed consideration.
Sistema JSFC
VTB Bank OAO
41
Agrokombinat Yuzhny has generated total revenues
of RUB 2.2 billion in the year 2015. Agrokombinat Yuzhny
grows 34,000 tons of vegetables per year.
Useful stickers
Rosneft, Bashneft, Alrosa in First Wave of Russian Privatisation
Alrosa, Rosneft and Bashneft were included in an existing privatisation plan
and are already traded on stock markets, making them easiest to sell, said Minister
for Economic Development, Alexey Ulyukayev, according to the TASS news agency.
Find out more:
The government's shares in Bashneft and Alrosa combined are worth around
RUB 600 billion (USD 7.5 billion) at current market prices, and the proposed sale
of a 19.5 percent share in Rosneft could raise a further RUB 500 billion (USD 6.5 billion).
Moody's withdrawing national scale ratings in Russia
Moody's, the rating agency, will withdraw all of its Russian
national scale ratings and shut down its joint venture with
Russian media company Interfax.
The company will keep its office in Moscow and
maintain global scale ratings, which are international
creditworthiness comparisons, on Russian entities.
Find out more:
Find out more:
TOP-100 largest Russian companies by market
capitalisation – 2016
Find out more:
Results of the fourth Moscow Economic
Forum (MEF)
Find out more:
Tap on QR-code to view information
22
Russian Regional Investment Climate Index
The Russian Regional Investment Climate Index
evaluates the efforts of the regional authorities
in providing favourable conditions for business
and identifies best practices. Its results encourage
competition for investments at the regional level.
Contacts
Joe Pacelli
Partner
[email protected]
Vladimir Sokolov
Research Specialist
[email protected]
Marina Elovskaya
Senior Manager
[email protected]
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Research Specialist
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Research Centre Leader
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Designer
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