27 Jun 2022 10:10

Sollers Auto owner Shvetsov sells automaker to senior management - paper

MOSCOW. June 27 (Interfax) - The principal owner of PJSC Sollers Auto, Vadim Shvetsov has pulled out of the automotive industry, selling his 76.7% stake in Sollers Auto to the group's senior management, national daily Kommersant reported on Monday, citing a source close to the company.

Shvetsov's Sollers Group LLC sold its 76.7% stake in PJSC Sollers Auto to Alter Invest LLC, a company founded by the automaker's senior executives, for cash based on a market valuation of assets in a deal that was closed on June 24, the paper's source said. Sollers Auto has not officially commented on the sale.

Kommersant said Sollers Auto's market capitalization on the Moscow Exchange was 5.8 billion rubles on June 24, so Shvetsov's stake was worth 4.5 billion rubles.

The SPARK-Interfax analytics system shows that Alter Invest LLC was founded on June 17 in the Moscow Region town of Khimki and it is headed by Sollers Auto CEO Nikolai Sobolev. Alter Invest's shareholders are Sobolev with 35.5%, Ulyanovsk Automobile Plant (UAZ) and Sollers Ford head Adil Shirinov with 39%, Sollers Auto deputy director Zoya Kaika with 20% and Sollers Auto deputy director for legal affairs Viktor Khvesenya with 5%.

Sollers Auto's main asset is UAZ. The company announced the completion of a reorganization at the end of 2021 that analysts thought might be preparation for entering into a partnership with another automaker. China's Chery was named as a possible candidate.

However, the European Union imposed sanctions against the plant on June 3, citing UAZ deliveries of Patriot vehicles to the army. Unlike U.S. sanctions, these restrictions are not extraterritorial, but at the very least they will affect relations with European suppliers, the paper said.

Sollers also has joint ventures with Ford, Isuzu and Mazda, and owns the Zavolzhsky Engine Plant (ZMZ) .

Shvetsov's decision to sell Sollers Auto is not related to possible sanctions against him as the owner of the group, the paper's source said. Auto industry sources cited by the paper mentioned general "fatigue" due to the constant uncertainty in the industry and said that in light of this Shvetsov might want to focus on other projects.

The paper's source said Shvetsov had steadily reduced his involvement in Sollers Auto's management after stepping down as group CEO in 2019, a position he had held since founding the company. Shvetsov has recently not participated in industry meetings and instead focused on other divisions of Sollers Group, including logistics and new projects such as electric car sharing with power company RusHydro , the source said.

In recent years, Sollers Auto has built its business on forming joint ventures, which is no longer viable. The new owners will develop the assets, but instead of JVs they are considering other possibilities for cooperation, including with Chinese auto companies, the paper said, citing the source. Work on mobility services will also continue.

Auto market analyst Vladimir Bespalov said the price of the deal could vary widely depending on its terms. "One cannot say that something has changed for the company, since all the new owners have worked at Sollers for a long time. But it's clear that the absence of one controlling shareholder in the current circumstances reduces risks. It's easier to work with partners, including future ones," the paper reported Bespalov as saying.

The sale of the controlling stake in Sollers Auto also reduces risks for Sollers Group's logistics business and for Shvetsov personally, he said.

The most urgent thing for the automaker now is its strategy, because the problem of updating UAZ's model line remains acute, Bespalov said. The business of joint ventures with Ford and Mazda will clearly "be put on pause for a time," since it is necessary to resolve technical and legal issues that have arisen due to sanctions, he said.