Президент "Суммы" Александр Винокуров рассказал о стратегии группы, развитии бизнесов и приобретении активов
Ziyavudin Magomedov's Summa Group owns assets that specialize in port logistics, engineering, construction, telecommunications, and the oil and gas industry. In an interview with Prime, the President and CEO of Summa Group, Alexander Vinokurov, discussed the group's business development plans, the purchase of the transportation group FESCO, the competition for federal licenses to build LTE networks, the plans for United Grain Company, the IPO for the biggest gas-production company in the Republic of Sakha - the Yakutsk Fuel and Energy Company, and the mining business.
Question: Summa is finalizing two major deals - becoming a shareholding of United Grain Company and purchasing shares in the transportation group FESCO from the businessman Sergei Generalov. Will these deals alter the group's strategy in any way?
Answer: These deals are entirely consistent with our strategy which has four key divisions. The first is infrastructure, transportation, and logistics, the second consists of engineering and construction, the third division includes oil/gas and mining industries, and the fourth is focused on new technology. We devote a lot of attention to all of our businesses but I can say that our first division is a priority for us.
Question: Why do you find this sector so attractive?
Answer: There are several reasons. First of all - Russia's economic growth. We think that the economy will grow by 4-5% in real terms, even with only a baseline scenario for economic development and with oil prices staying around $100 per a barrel. This will help create an increase in exports and freight traffic. Transportation and logistics are a key component everywhere, but our infrastructure requires significant development and the infrastructure projects need more funding - at least four times as much, by some estimates. This will put our infrastructure at the level it needs to be. We also see that the rise in consumption and freight traffic is moving fairly rapidly from West to East, but Russia is still not fully utilizing its potential as a transit country between Europe and Asia. Currently only about one percent of all trade between Europe and Asia travels across Russia. There are numerous reasons for this, but we feel that one of the most significant is the absence of a major intermodal transportation company that is diversified geographically. And that's the model that we are developing.
Question: Is that why you have bought FESCO Group?
Answer: FESCO Group fits perfectly into this strategy because it gives us a presence in three key water basins: in the northwest, southwest, and Russian Far East: Primorsk, Novorossiysk, and Vladivostok. It also provides us with a railroad component in the form of Transgarant, FESCO Rail and Russkaya Troyka. Both the dry terminal, which is now under construction near Moscow, and the shipping firm, which is integrated into the rest of the business, fit very well into this strategy.
Question: Where did the idea to buy FESCO come from?
Answer: We considered the possibility of buying Transgarant (FESCO's rail operator - ed.), and then we had an idea to consider FESCO as a whole.
Question: How much is Summa spending to buy the shares of FESCO from Mr. Generalov? We've heard everything from $1 to $1.4 billion.
Answer: We can't give exact numbers, but it's closer to your lower figure.
Question: Which banks are financing the purchase of FESCO? And when do you expect to reach an agreement with the banks?
Answer: Many banks are prepared to offer funding and we already have agreements. However since we keep getting new offers our list is not yet final - but we do hope to close it very soon.
Question: When do you plan to make full payment for the package of FESCO's shares and complete the deal?
Answer: Sometime in the next few weeks. We have already made an advance payment and received the approval of the Federal Antitrust Agency. In addition, we have already consolidated some of the shares by buying them on the market.
Question: So it's entirely possible that everything will be completed in July?
Answer: Yes.
Question: When will an offer be made to the minority shareholders of Far Eastern Shipping Company, which is part of FESCO Group?
Answer: After the deal is closed.
Question: How much is Summa prepared to spend for the shares? Will the company raise the money from banks or use its own cash?
Answer: I can't disclose an exact figure. But we'll buy the shares with our own funds.
Question: You have said that you'll sell some of the ships belonging to Far Eastern Shipping Company. How many do you have in mind?
Answer: We will sell the ships that have no role to play in the group's business. FESCO operates two types of shipping businesses. We will leave the vessels the company uses in its logistics chain, but sell some of the bulk carriers that are operated on a charter basis. Far Eastern Shipping Company has a total of 47 ships and we're going to sell 24 of them.
Question: Summa received a 22% stake in TransContainer as part of its purchase of FESCO. Another 50% of that operator belongs to Russian Railways, and they're offering to contribute this package of shares to a unified logistics company for the countries of the customs union. Market players and the Ministry of Economic Development are awaiting the sale of TransContainer's shares at auction. What are Summa's plans for this asset?
Answer: We expect Transcontainer to be privatized, and we'll take part in that, depending on the conditions of privatization. Creating a joint venture is a sound idea, but not one based on TransContainer. A joint venture could be established to lease rail cars and use containers and platform cars, but a proposal to completely surrender an asset that needs developing and which is so vital for the strengthening of our country's transportation and logistics capabilities looks very dubious. In addition, as I understand it, the discussion about creating a company within the framework of the customs union has centered on RZD Logistics, not TransContainer, which makes far more sense.
Question: The Russian first deputy prime minister, Igor Shuvalov, recently signed a directive instructing the shareholders' meeting of OZK to issue additional shares of that grain company for the benefit of Summa Group. Will Summa alter OZK's strategy once it becomes a shareholder?
Answer: It's entirely possible that some adjustments will be made. The company has a sizable investment program, which we fully approve of, on the whole. The guiding principle behind that program is to create a major infrastructure company that will help strengthen the position of our grain on international markets.
Question: A decision was made last week to privatize 100% of the government's stake in OZK in the next year or two. Will you make a bid for those shares?
Answer: Probably so. But that will depend on the terms, particularly the price.
Question: You also mentioned the construction business. What do you think the future holds there?
Answer: We have extensive experience in industrial construction in infrastructure and in the oil/gas and energy sectors, as well as in building and renovating unique cultural and sports facilities. We're going to continue development of this division, to sharpen our skills, and to explore other aspects of the construction industry. We own four construction companies and eventually plan to integrate them into a single, major firm.
Question: Another of the group's assets is Summa Telecom, a national communications service provider that puts telecommunications projects into operation on various levels. What's the company's strategy?
Answer: In telecom, we have three main areas we're developing. The first is to build up a critical mass of broadband Internet subscribers in the cities where we're located. We would like to reach 450,000 subscribers in the next 18 months. The second is Glonass. Providing Glonass services in many regions where we're already present, expanding into new regions, developing infrastructure, software, etc. Developing 4G is the third area.
Question: What do you think of Summa's chances in the competition for federal licenses to build LTE networks?
Answer: We're taking part in that, of course, since we're a player in the communications market. We have done everything we can to make sure we submit a high-quality application. I don't think the competition was intentionally drawn up in such as way as to provide special conditions for anyone in particular, so I think everyone has a chance.
Question: Officials have said that it is possible to find the frequencies for LTE to be put up for tender held for the regional operators. Will you take part in this tendering process if it is held?
Answer: Probably so - especially in those regions where we have a presence in the broadband Internet market. We'll take part in those regions where we know the clients and understand the market.
Question: You mentioned your mining business. Your group established First Mining Company for the purpose of carrying out exploration and mining work, and while prospecting on Novaya Zemlya that company discovered the Pavlovsk deposit, which contains large amounts of lead, zinc, and silver. What plans does Summa Group have for its development?
Answer: This is an interesting asset that we want to develop, because we see tremendous upside in the zinc market. Construction and infrastructure account for about 2/3 of global zinc consumption. Currently about half of the seven billion people on Earth live in urban areas, and by 2050, 70% of the world's projected population of nine billion will be city dwellers. This means that the urban population will almost double, and we are currently seeing the most impressive pace of urban construction in history. As a result, global zinc consumption is increasing by 4-5% per year, and in the next few years the world will need an extra 550,000 tons of ore per year in order to meet the growing demand and supplement the mines that are already in operation. Much of this growth in demand comes from China.
Question: Summa is finalizing two major deals - becoming a shareholding of United Grain Company and purchasing shares in the transportation group FESCO from the businessman Sergei Generalov. Will these deals alter the group's strategy in any way?
Answer: These deals are entirely consistent with our strategy which has four key divisions. The first is infrastructure, transportation, and logistics, the second consists of engineering and construction, the third division includes oil/gas and mining industries, and the fourth is focused on new technology. We devote a lot of attention to all of our businesses but I can say that our first division is a priority for us.
Question: Why do you find this sector so attractive?
Answer: There are several reasons. First of all - Russia's economic growth. We think that the economy will grow by 4-5% in real terms, even with only a baseline scenario for economic development and with oil prices staying around $100 per a barrel. This will help create an increase in exports and freight traffic. Transportation and logistics are a key component everywhere, but our infrastructure requires significant development and the infrastructure projects need more funding - at least four times as much, by some estimates. This will put our infrastructure at the level it needs to be. We also see that the rise in consumption and freight traffic is moving fairly rapidly from West to East, but Russia is still not fully utilizing its potential as a transit country between Europe and Asia. Currently only about one percent of all trade between Europe and Asia travels across Russia. There are numerous reasons for this, but we feel that one of the most significant is the absence of a major intermodal transportation company that is diversified geographically. And that's the model that we are developing.
Question: Is that why you have bought FESCO Group?
Answer: FESCO Group fits perfectly into this strategy because it gives us a presence in three key water basins: in the northwest, southwest, and Russian Far East: Primorsk, Novorossiysk, and Vladivostok. It also provides us with a railroad component in the form of Transgarant, FESCO Rail and Russkaya Troyka. Both the dry terminal, which is now under construction near Moscow, and the shipping firm, which is integrated into the rest of the business, fit very well into this strategy.
Question: Where did the idea to buy FESCO come from?
Answer: We considered the possibility of buying Transgarant (FESCO's rail operator - ed.), and then we had an idea to consider FESCO as a whole.
Question: How much is Summa spending to buy the shares of FESCO from Mr. Generalov? We've heard everything from $1 to $1.4 billion.
Answer: We can't give exact numbers, but it's closer to your lower figure.
Question: Which banks are financing the purchase of FESCO? And when do you expect to reach an agreement with the banks?
Answer: Many banks are prepared to offer funding and we already have agreements. However since we keep getting new offers our list is not yet final - but we do hope to close it very soon.
Question: When do you plan to make full payment for the package of FESCO's shares and complete the deal?
Answer: Sometime in the next few weeks. We have already made an advance payment and received the approval of the Federal Antitrust Agency. In addition, we have already consolidated some of the shares by buying them on the market.
Question: So it's entirely possible that everything will be completed in July?
Answer: Yes.
Question: When will an offer be made to the minority shareholders of Far Eastern Shipping Company, which is part of FESCO Group?
Answer: After the deal is closed.
Question: How much is Summa prepared to spend for the shares? Will the company raise the money from banks or use its own cash?
Answer: I can't disclose an exact figure. But we'll buy the shares with our own funds.
Question: You have said that you'll sell some of the ships belonging to Far Eastern Shipping Company. How many do you have in mind?
Answer: We will sell the ships that have no role to play in the group's business. FESCO operates two types of shipping businesses. We will leave the vessels the company uses in its logistics chain, but sell some of the bulk carriers that are operated on a charter basis. Far Eastern Shipping Company has a total of 47 ships and we're going to sell 24 of them.
Question: Summa received a 22% stake in TransContainer as part of its purchase of FESCO. Another 50% of that operator belongs to Russian Railways, and they're offering to contribute this package of shares to a unified logistics company for the countries of the customs union. Market players and the Ministry of Economic Development are awaiting the sale of TransContainer's shares at auction. What are Summa's plans for this asset?
Answer: We expect Transcontainer to be privatized, and we'll take part in that, depending on the conditions of privatization. Creating a joint venture is a sound idea, but not one based on TransContainer. A joint venture could be established to lease rail cars and use containers and platform cars, but a proposal to completely surrender an asset that needs developing and which is so vital for the strengthening of our country's transportation and logistics capabilities looks very dubious. In addition, as I understand it, the discussion about creating a company within the framework of the customs union has centered on RZD Logistics, not TransContainer, which makes far more sense.
Question: The Russian first deputy prime minister, Igor Shuvalov, recently signed a directive instructing the shareholders' meeting of OZK to issue additional shares of that grain company for the benefit of Summa Group. Will Summa alter OZK's strategy once it becomes a shareholder?
Answer: It's entirely possible that some adjustments will be made. The company has a sizable investment program, which we fully approve of, on the whole. The guiding principle behind that program is to create a major infrastructure company that will help strengthen the position of our grain on international markets.
Question: A decision was made last week to privatize 100% of the government's stake in OZK in the next year or two. Will you make a bid for those shares?
Answer: Probably so. But that will depend on the terms, particularly the price.
Question: You also mentioned the construction business. What do you think the future holds there?
Answer: We have extensive experience in industrial construction in infrastructure and in the oil/gas and energy sectors, as well as in building and renovating unique cultural and sports facilities. We're going to continue development of this division, to sharpen our skills, and to explore other aspects of the construction industry. We own four construction companies and eventually plan to integrate them into a single, major firm.
Question: Another of the group's assets is Summa Telecom, a national communications service provider that puts telecommunications projects into operation on various levels. What's the company's strategy?
Answer: In telecom, we have three main areas we're developing. The first is to build up a critical mass of broadband Internet subscribers in the cities where we're located. We would like to reach 450,000 subscribers in the next 18 months. The second is Glonass. Providing Glonass services in many regions where we're already present, expanding into new regions, developing infrastructure, software, etc. Developing 4G is the third area.
Question: What do you think of Summa's chances in the competition for federal licenses to build LTE networks?
Answer: We're taking part in that, of course, since we're a player in the communications market. We have done everything we can to make sure we submit a high-quality application. I don't think the competition was intentionally drawn up in such as way as to provide special conditions for anyone in particular, so I think everyone has a chance.
Question: Officials have said that it is possible to find the frequencies for LTE to be put up for tender held for the regional operators. Will you take part in this tendering process if it is held?
Answer: Probably so - especially in those regions where we have a presence in the broadband Internet market. We'll take part in those regions where we know the clients and understand the market.
Question: You mentioned your mining business. Your group established First Mining Company for the purpose of carrying out exploration and mining work, and while prospecting on Novaya Zemlya that company discovered the Pavlovsk deposit, which contains large amounts of lead, zinc, and silver. What plans does Summa Group have for its development?
Answer: This is an interesting asset that we want to develop, because we see tremendous upside in the zinc market. Construction and infrastructure account for about 2/3 of global zinc consumption. Currently about half of the seven billion people on Earth live in urban areas, and by 2050, 70% of the world's projected population of nine billion will be city dwellers. This means that the urban population will almost double, and we are currently seeing the most impressive pace of urban construction in history. As a result, global zinc consumption is increasing by 4-5% per year, and in the next few years the world will need an extra 550,000 tons of ore per year in order to meet the growing demand and supplement the mines that are already in operation. Much of this growth in demand comes from China.
Regarding Pavlovsk in particular - we plan to obtain a license and begin prospecting very soon. We are going to build an extraction and processing plant there.
Question: How much are you planning to invest in this project, and what's the timeline for constructing the mining and processing plant?
Answer: That's not our objective. But if we find some interesting prospects we'll consider them. We are looking at deposits, but our criteria are quite strict, so right now any negotiations are still at the preliminary stage.
Question: Yakutsk Fuel and Energy Company represents Summa's oil and gas division. This is the main gas-production company in the Republic of Sakha and the only supplier of gas to the entire region. There were plans for an IPO. When will the company be ready for that?
Answer: The company is in the process of getting ready. Preparing for an IPO strengthens a company because it becomes more transparent and develops more efficient business procedures. However one has to take into account what is happening in the markets and the current level of volatility. As we have said, the company will be ready for an IPO by mid-autumn, but when the time comes to make the decision, everything will depend on the circumstances. We have no urgent need for money.
Question: How many shares are you planning to place and where are you thinking of doing it?
Answer: We haven't yet made a final decision - something like 20-25%. Most of the funds will be put into the company. Probably we'll place some of the shares in Russia and some in London or Hong Kong.
Nadezhda Frolova, PRIME
Question: How much are you planning to invest in this project, and what's the timeline for constructing the mining and processing plant?
Answer: That's not our objective. But if we find some interesting prospects we'll consider them. We are looking at deposits, but our criteria are quite strict, so right now any negotiations are still at the preliminary stage.
Question: Yakutsk Fuel and Energy Company represents Summa's oil and gas division. This is the main gas-production company in the Republic of Sakha and the only supplier of gas to the entire region. There were plans for an IPO. When will the company be ready for that?
Answer: The company is in the process of getting ready. Preparing for an IPO strengthens a company because it becomes more transparent and develops more efficient business procedures. However one has to take into account what is happening in the markets and the current level of volatility. As we have said, the company will be ready for an IPO by mid-autumn, but when the time comes to make the decision, everything will depend on the circumstances. We have no urgent need for money.
Question: How many shares are you planning to place and where are you thinking of doing it?
Answer: We haven't yet made a final decision - something like 20-25%. Most of the funds will be put into the company. Probably we'll place some of the shares in Russia and some in London or Hong Kong.
Nadezhda Frolova, PRIME