Strategic Sectors Law Update – Second (and Last) Commission Meeting of 2013

On November 13, 2013, PM Medvedev held the second and final meeting of the Commission on Foreign Investment for 2013. According to public sources, the following deals were addressed:

  • China National Oil and Gas Exploration and Development Corp. –> Yamal LNG – the Commission approved CNODC’s acquisition of a 20 percent voting stake in Yamal LNG, which is working to develop LNG production capacity on the Yamal peninsula. CNODC will acquire its shares from the current owner of 80 percent of Yamal LNG, Russian company NOVATEK (НОВАТЭК). Total SA owns the other 20 percent of shares.
  • Jilin Horoc Chinese State Company –> Geotekhnologiya – the Commission approved a request by Jilin Horoc to acquire a controlling stake – 25 percent – in ZAO “Geotekhnologiya“, which owns major nickel deposits – 43K tons – in the Kamchatka region.
  • Liebherr –> Liebherr-Aerospace Nizhny Novgorod –  Swiss equipment manufacturer Liebherr won approval to increase its ownership in OOO “Liebherr-Aerospace Nizhny Novgorod” to 75 percent. Currently, Liebherr owns 49.9 percent and the other 50.1 percent was held by Vladimir Luzyanin, President of OAO “Gidromash“. Liebherr’s investment will be focused on the production and repair of equipment for dual-use aircraft.
  • Hetero FZCO –> Makiz-Farma – the Commission approved Indian Hetero’s purchase of Makiz-Farma from unknown owners of multiple offshore companies (pretty good history here).

Global Ports –> National Container Company (Национальная Контейнерная Компания)

The last transaction is quite interesting and merits more detail. The Commission approved Danish port terminal owner/operator Global Ports’ acquisition of 100 percent of National Container Company (NKK) at a purchase price of USD 291 million. The deal will make Global Ports the undisputed king of Russian container terminals, particularly in St. Petersburg, where it will now control two of the biggest ports (PLP and PKT). But behind the Western corporate PR of Global Ports there is a truly Russian story.

Although Global Ports is nominally ‘Danish’, the primary individuals behind it – Nikita Mishin, Konstantin Nikolaev, and Andrey Filatov – are Russian. The three own Transportation Investments Holding Limited (TIHL), which controls 30.75 percent of Global Ports shares. TIHL is a Cyprus company, whose main shareholder (94 percent) is Leverret Holding Ltd Limassol Cyprus. Leverret is in turn 100 percent owned by Mirbay International Inc, a company incorporated in the Bahamas. TIHL owns its shares in Global Ports through its 100 percent ownership of N-Trans. Here is a picture of the whole structure: TIHL Shareholding   (source: http://bankwatch.org/documents/Vinci_oligarchs_taxhavens_Khimki.pdf) 

Many Russian media outlets have argued that N-Trans’ secretive ownership structure is aimed at concealing a fourth individual: Igor Levitin, who was Minister of Transportation from 2004 until his resignation in 2012 (he now serves as an adviser to Putin). It is undisputed that Levitin worked as a manager at N-Trans’ predecessor from 1996-2004, and that there are links between companies owned by his family members and the three official TIHL shareholders.

NKK also has an interesting ownership structure and history. Apparently, the owners are Andrey Kobsar and the management of First Quantum (FQ), a UK company. Duma Deputy Vitaliy Yuzhilin owned FQ since the late-1990s, and apparently continued to own part of FQ at least up until last year, but reportedly sold off his stake.

In 2002, FQ entered into a joint venture with a company called Severstaltrans to form NKK. But in 2006, Severstaltrans withdrew from the investment after a falling out with FQ. Later in 2008, Severstaltrans changed its name to N-Trans, when Aleksey Mordashov, oligarch CEO of Severstal, agreed to exit the company. Shortly after, N-Trans combined its global port holdings under a single brand: Global Ports.

Thus, Global Ports is essentially reacquiring its share – and more – of the company it started in 2002 – NKK – from its former JV partner – FQ, after each company has ‘officially’ shed its ties to any hidden officials with beneficial ownership.

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