Strong investment potential in Russian transport sectors
Sakshi Sharma (Infrastructure Journal online, UK)
The airport, ports, rail and roads sectors in Russia present good investment potential in the coming years, according to a senior official at VTB Capital, the investment arm of VTB Group.
In an exclusive interview with IJ News Peter Stonor, global head of infrastructure and transport for VTB Capital said that the brownfield airport space is an interesting one and that a lot of work is needed at Russia's various regional airports. The government is also mulling privatisation for some airports and encouraging more foreign participation in the sector, Stonor said.
Other transport infrastructure sectors that he singled out that are ripe for investment include; ports as trade gateways across the country, railways and the country's developing road network.
He said that Russia's position is strengthened by the fact that it has been a stable financial market with four to five per cent GDP growth rates. He added that the country has active capital markets and the sovereign bond issuances have been on a high, all reflecting that the country is willing to test out alternative sources of financing as well.
Earlier this year in April, Russian Railways launched its inaugural €1 billion (US$1.3bn), eight-year benchmark euro denominated bond, rated Baa1/BBB/BBB. The proceeds raised through the euro denominated bond offering are intended to be used by Russian Railways for its ordinary course of business, including funding the company’s future investment programme as well as for paying off its debts. The bond witnessed good participation by European investors especially from Germany and Austria.
Stonor who was part of the three-day RUSSIA CALLING Investment Forum held in London by VTB Capital this week, said that the country is definitely looking to attract institutional investors - both local and international - as well as mobilize Russian Pension Funds. As also reported earlier this week by IJ News, Russia is keen to unlock private sector capital to finance its future infrastructure pipeline.
The hope is that the country will tender out some concession based road schemes during this year including the M11 highway.
The previous big transport project that Russia closed was the US$3.9 billion Western High Speed Diameter toll road PPP which reached financial close at the end of 2012.