July 20, 2018 / 10:03 AM / 25 days ago

Russian Railways consider ceding control in pension fund: sources

MOSCOW (Reuters) - Russian Railways, the state-controlled railways operator, is considering ceding control in Blagosostoyanie, the country’s second largest corporate pension fund as part of a drive to divest non-core assets, six sources familiar with the plans told Reuters.

Blagosostoyanie manages pensions worth around 380 billion rubles ($6 billion) which cover 1.3 million people and is focusing on the workers of the Russian Railways, the country’s biggest employer.

A source close to Russian Railways told Reuters that the fund’s board plans to meet next week to discuss a possible sale of a controlling stake in Blagosostoyanie.

A second source, also close to Russian Railways, said that between 51 to 75 percent of the fund could be sold. According to Russian law, the fund must be turned into a joint stock company, not necessarily public, by next year.

After that, the fund must be included in the balance sheet of its controlling shareholder, currently Russian Railways.

For the railways monopoly, this could mean a change in its debt metrics and higher borrowing costs, another industry source told Reuters. This is one reason why Russian Railways wants to sell the stake, the source said.

Two sources close to Russian Railways said that one of the possible buyers was a company linked to Gazprom (GAZP.MM), Russian state-controlled gas producer.

The sources did not provide further details on the rationale for such a purchase.

Other sources, which include two bankers familiar with the plan, confirmed the Russian Railways idea to sell control in the fund. Gazprom, the Russian Railways and Blagosostoyanie did not immediately reply to Reuters request for a comment.

Writing by Katya Golubkova; Editing by Keith Weir

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