MOSCOW, Russia (Reuters) — Russia has chosen an investment firm to advise it on the sale of a controlling stake in state grain trader United Grain Company, signalling it will press ahead with the privatization despite market uncertainty caused by poor relations with the West.
The export of wheat and other agricultural goods from Russia is dominated by privately owned firms, but UGC has played a major role in the domestic market and controls a grain exporting terminal at the Black Sea port of Novorossiisk.
Russia’s state development bank VEB said VEB Capital, one of its units, had won the right to advise the Russian government on UGC’s privatization.
Under Russia’s privatization plan, aimed at plugging holes in the state budget and approved before U.S. sanctions were signed by President Donald Trump in August, UGC is scheduled to be privatized in 2017-19. It was not clear whether the choice of the adviser would speed up the sale of the 50 percent plus one share in the company.
The rest of it is currently owned by investment group Summa.
“Summa is interested in the purchase of the state stake in UGC,” said a Summa spokesperson who asked not to be named in line with Summa’s policy.
VEB Capital will now prepare proposals to the government on the planned share sale and will find an agent to estimate UGC’s value.
The UGC stake sale could potentially attract interest from foreign trading firms, but Russia has avoided selling port-related infrastructure to foreigners in recent years.
UGC is also managing the agriculture ministry’s four million tonne grain stockpile.
However, that task should be handed to another state entity before UGC’s privatization, said Russian Deputy Prime Minister Arkady Dvorkovich, who is in charge of the agriculture sector.