Moscow to sell $184m stake in Sovcomflot as deficit bites

Russia is preparing to raise roughly RUB15bn ($184m) by selling a 7.8% stake in Sovcomflot, the sanctioned state-controlled tanker and LNG carrier owner, as Moscow hunts for revenue to plug a widening budget deficit.

The Federal Agency for State Property Management, Rosimushchestvo, has launched a tender to select an adviser for the disposal of 7.8% minus one share in the Moscow-listed shipping group. Applications close on November 17. The valuation — about $184m at recent share prices — is a figure the market immediately tested: Sovcomflot shares fell nearly 4% on Tuesday after the announcement, on concern that a placement of this size would demand a substantial discount.

What does the sale change for control of the fleet?

Not much, formally. The Russian government currently holds 82.8% of Sovcomflot, having floated 17.2% of the company in 2020. This sale would trim the state's holding to 75% plus one share — still an unambiguous controlling stake in Russia's largest shipping company. The structure preserves state command over a fleet that remains central to Russian crude and energy exports.

The timing is the notable part. Moscow is selling into strength, not distress.

Why now? The numbers behind the decision

Sovcomflot's financial performance has recovered sharply, even as the company operates under US, EU and UK sanctions for its role in transporting Russian energy exports. In the first half of the year it reported a net profit of $284m, reversing a $435m loss in the same period a year earlier. Time-charter-equivalent revenues jumped 61% to $809m. EBITDA more than doubled to $547m.

That swing — from a $435m loss to a $284m profit — reflects soaring tanker markets that have lifted earnings across the segment. It also gives the state a rare window to monetise a sanctioned asset at a moment of demonstrated profitability. The caveat is obvious: sanctions cap the buyer pool, and the near-4% share price drop suggests investors expect the placement to price at a discount. A headline value of $184m may not survive contact with the market.

Where else is Moscow raising cash?

Sovcomflot is one piece of a broader privatisation push. The government is also considering selling:

• a 20% stake in Novorossiysk Commercial Sea Port, the major Black Sea gateway;
• nearly 24% of flag carrier Aeroflot.

Both disposals serve the same purpose: generating funds amid mounting expenditure on the war in Ukraine.

What are the consequences for shippers and charterers?

For counterparties in the tanker market, the sale changes little operationally. The state retains control, the fleet stays under sanctions, and Sovcomflot's role in moving Russian crude continues unchanged. Minority shareholders in Moscow take the dilution and the discount risk. The commercial significance lies mainly in what the sale signals: Moscow is converting liquid, profit-generating state assets into cash, and it is doing so while cyclical tanker earnings — the engine behind Sovcomflot's 61% revenue jump — remain elevated.

Whether the $184m asking price holds depends on how far the placement discount runs and how much sanctioned-paper appetite exists among domestic investors before the November 17 adviser deadline crystallises a sale timetable.