26 Dec 2024 17:59

Russian state-owned companies can attract financing through long-term bonds in addition to IPOs - finance minister

MOSCOW. Dec 26 (Interfax) - State-owned companies, facing limited access to bank lending, could attract financing by entering the equity market as well as issuing long-term bonds, the Finance Ministry said.

The state sector accounts for a significant share of the Russian economy, and the Finance Ministry believes that state-owned companies should attract more private capital, Finance Minister Anton Siluanov said during a lecture at Russia's Financial University.

"To achieve this, we need to encourage them to enter the market, go public through IPOs, issue shares and potentially long-term bonds. This is the goal we have set in our strategy," he said.

The top management of state-owned companies should be interested in being active in the capital market, Siluanov said. Currently, such initiatives are often unnecessary for them, he said.

"If needed, [they] can request subsidies from the state. Why make the effort? They are state companies and will receive help if required," Siluanov said when describing the mindset of such executives.

"But if private investors and business representatives are involved in these companies, then everything is different. Pay dividends, provide returns on invested capital, because state companies currently lack this motivation. Whether or not dividends are paid is often a secondary issue. Therefore, the motivation to bring in private capital, to earn more and pay more dividends, is fully aligned with the state's position, and we will work with state-owned companies in this direction," Siluanov said.

The state can take two approaches - raising funds from the market to support the company's development or selling shares to replenish the budget, Siluanov said. "We have employed both strategies," he said. In strategic companies such as Gazprom , Rosneft or Transneft (MOEX; TRNF), the state will retain control. However, in non-strategic companies, the state could maintain a blocking stake or a golden share while selling the remaining shares on the market, he said.