Shares in Russia's natural gas monopoly Gazprom are set to be liberalized within days
Shares in Russia's natural gas monopoly Gazprom are set to be liberalized within days.
Abolishing the ring fence is expected to dramatically increase the compan's liquidity and boost capitalization. Gazprom stock, long considered to be investor-averse, could soon become one of the most sought after equities on international bourses.
A 1997 presidential resolution barred foreign-controlled firms from owning Gazprom shares traded on Russian exchanges. The decree capped foreign ownership at 20 percent and limited this to American Depository Shares traded in London and New York.
Gazprom ADS`s trade at a higher price than local common shares, and make up a paltry 3 percent of the company`s current non-local traded free float. Market estimates suggest that as much of 10 percent of Gazprom shares are owned by foreign entities through gray schemes, grudgingly tolerated by the government and Gazprom.
All of this is about to dramatically change.
Through the share liberalization plan, up to 49 percent of Gazprom shares could be publicly traded with no restrictions -- the government will retain its recently acquired majority control of the company. The liberalization of Gazprom`s shares will be nothing less than Russia`s own investment big bang. Holding 20 percent of the world`s gas reserves, producing 85 percent of Russia`s gas and 16 percent of global output, supplying a quarter of the Western European market, and, importantly, accounting for up to 25 percent of federal tax receipts, Gazprom is an extremely attractive investment target -- it could not be otherwise.