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FSUOGM INVESTMENT FSUOGM
Russia's Gazprom could cut stake
in oil arm Gazprom Neft in SPO
RUSSIA RUSSIA'S natural gas giant Gazprom could stake sale would have to be much stronger than
cut its stake in oil major Gazprom Neft after the simply index inclusion," Sberbank CIB believes.
Gazprom has long been recovery in the oil sector, Interfax reported citing Other reasons could be reducing financial
reluctant to discuss the CFO of Gazprom Neft, Alexei Yankevich. leverage.
reducing its holding in "Gazprom Neft's free float is currently 4.2% "Should Gazprom try to sell some of its >95%
Gazprom Neft. and market capitalisation is $20bn," Sberbank stake in Gazprom Neft, it could work out posi-
CIB reminded on December 2, noting that an tively for minority shareholders of both compa-
increase in the free float would be positive for nies," BCS Global Markets wrote on December
the company's valuation. 2, noting MSCI index inclusion and more inter-
The analysts at Sberbank CIB currently est in Gazprom's valuable liquids business as
assume a 2 percentage point equity premium main benefits.
for low liquidity in their Gazprom Neft valua- "However, judging by the quick reaction of
tion model, and removing this premium would the company’s press service [that stressed the
increase the company's fair value by around 25%, plans were only hypothetical], it appears that
they argue. although the question may arise occasionally in
VTB Capital (VTBC) on December 2 a hypothetical manner within the two compa-
notes that the operational interconnec- nies, it is probably not in the companies’ active,
tions between the two companies have been near-term plans," BCS GM adds.
growing in recent years, with Gazprom Neft Gazprom Neft posted $7.3bn in revenues in
preparing to increase its oil production at 3Q20 under IFRS, with Ebitda of $1.75bn ($2bn
Gazprom’s gas assets. with joint venture contributions) beating the
While Gazprom has always been reluctant expectations by 22%. Net profit of $0.4bn was
to discuss reducing its 96% holding in Gazprom 17% above the consensus forecasts.
Neft, inclusion of its shares into equity indices As reported by bne IntelliNews, previously in
that require at least 10% free float is the main rea- the second quarter the company's results were
son for selling the stake, according to Yankevich. stable, but the cash flow disappointed the inves-
"However, we think that the justification for a tors.
P14 www. NEWSBASE .com Week 49 09•December•2020