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Billionaire Lebedev may sell Aeroflot stock to public

Russian billionaire Alexander Lebedev said he may dispose of his 30% stake in OAO Aeroflot, Russia's largest airline, in a share sale to the Russian public similar to those held by state-run OAO Rosneft and OAO Sberbank.

„This is a fresh idea, to sell Aeroflot shares from corporate hands to retail investors,” Lebedev, who is also a lawmaker in the lower house of parliament, said by phone yesterday. Aeroflot, which last year entered the SkyTeam alliance of Air France-KLM Group and Delta Air Lines Inc., is 51% controlled by the state. The government has been considering selling its stake in the Moscow-based airline for years. The airline is on a list of so-called strategic companies that must remain majority state-held. Lebedev controls Aeroflot shares through his National Reserve Corp., which acquired a 26% stake from fellow billionaire Roman Abramovich's Millhouse Capital in 2003. The value of that stake has surged more than sevenfold since then, to $785 million from $104 million. Lebedev bought the other 4% he owns in Aeroflot on the open market. „It will increase the free float, the company will liven up, will get real shareholders,” Lebedev said, saying the share sale may resemble Rosneft's, Russia's second-largest oil producer, held last year. „It will be like people's capitalism. The Kremlin may like it.” Moscow-based Rosneft raised $10.6 billion selling a 15% stake in July in Russia's largest stock sale.

Sberbank, the nation's biggest lender, is seeking to raise $12 billion by selling as many 3.5 million new shares through its nationwide bank network. VTB Group, Russia's second-biggest bank, plans to raise as much as $4.6 billion by selling a quarter of its stock this year. Lebedev said he has already proposed the idea to the Kremlin and the airline's board of directors. President Vladimir Putin urged companies earlier this month to sell as many shares as possible on local stock exchanges rather than abroad to give Russians more opportunities to invest. Companies that have carried out large share sales „are stable institutions,” Putin said during his annual press conference February 1, naming Rosneft, VTB and Sberbank as examples. Yelena Sakhnova, a transportation analyst with Deutsche UFG in Moscow, said she welcomed the idea of a stock sale. „Aeroflot has two problems: it's overstaffed and it has a low free float,” Sakhnova said in a telephone interview from Moscow yesterday. „The shares will at last become available on the market.”

Sakhnova estimated that Aeroflot's freely traded shares amount to between 5% and 8% of the total stock. She sees the fair value of Aeroflot shares at $3.20 apiece and expects it to rise to $4 once the free float is increased. Shares of Aeroflot in Moscow fell 0.06 rubles, or less than 0.1%, to 71.64 ($2.73) on the Micex Stock Exchange yesterday. „It's a good stock, more people are flying as the economy is growing, the company is consolidating with other airlines, showing good financial results, and is building the Sheremetyevo-3 airport terminal,” Sakhnova said. Aeroflot Deputy CEO Lev Koshlyakov said he was not yet familiar with the idea. „Aeroflot becoming a more active participant of the stock market is not the main task of either the management or the state,” he said in a telephone interview from Moscow today. Koshlyakov said that the company will put more effort into consolidating regional carriers under its wing this year. Aeroflot last month approved a plan under which the airline will take over a number of government-owned carriers operating in Russia's Far East to form a regional subsidiary. (Bloomberg)