(Bloomberg) — President Vladimir Putin ordered the transfer of all rights to manage St. Petersburg’s Pulkovo airport from foreign shareholders, including Germany’s Fraport AG and Qatar’s wealth fund, by shifting their shares to a new Russian company.
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According to a decree published late Thursday, shares in the Cyprus-registered concession that operates the airport of Russia’s second-largest city will be consolidated into a new domestic company. Existing investors, which include a consortium with Abu Dhabi sovereign wealth fund Mubadala Investment Co., will retain their shares but will not have voting rights, as these rights belong only to Russian shareholders of the new company.
German airport operator Fraport, Qatar Investment Authority and Russian VTB Bank each hold around 25% of the Pulkovo concession. According to the Interfax news service, the rest is controlled by a consortium of investors that includes the Russian sovereign wealth fund RDIF, Mubadala and Baring Vostok.
The measures taken in Pulkovo differ from previous moves by the Kremlin to seize assets of companies from so-called unfriendly countries following Russia’s invasion of Ukraine in February 2022. Putin’s decree raised the possibility that stakeholders’ voting rights could be restored “at their request, subject to the conclusion of corporate agreements with other participants in the company and the assumption of obligations to comply with Russian legislation.”
This potentially opens the door for Middle Eastern investors to restore their voting rights.
In retaliation for actions taken abroad to punish the Kremlin over the war in Ukraine, Russia has seized control of the local operations of several international holdings. It seized Russian factories owned by Danone SA and Carlsberg A/S in July and installed allies of Putin to run them. Russia also took control of the utility companies of Finland’s Fortum Oyj and Germany’s Uniper SE.
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Those acquisitions were based on a law signed by Putin in April that allowed the Kremlin to temporarily exercise state control over the assets of companies or individuals from “hostile states,” including the United States and its allies that are helping Ukraine defend itself.
The Pulkovo decision was based on laws signed long before the invasion of Ukraine and was based on a “threat to the national interests and economic security of the Russian Federation resulting from the violation of obligations by certain foreign legal entities.” the order released later Thursday said.
Putin also called on the government to create a new governing body for the Pulkovo operator. The airport in his hometown is the second largest in Russia in terms of passenger traffic after Moscow’s Domodedovo Airport and handled 17.5 million passengers as of October this year. St. Petersburg also has a military airport, Levashovo.
Fraport is examining the consequences of the Kremlin decision, said a spokesman. The company has already written down the value of the stake to zero after the attack on Ukraine, and there has been no interaction with Russia or a transfer of funds in one direction or the other since then, he said.
QIA and Mubadala declined to comment.
Pulkovo Airport welcomed Putin’s order and said it would “restore corporate governance mechanisms,” RIA Novosti reported, citing the company’s statement.
– With support from Benedikt Kammel and Nicolas Parasie.
(Updates with details from fourth paragraph.)
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