Depressed freight markets are to blame for Sovcomflot’s long-delayed initial public offering (IPO) but an upturn is on its way, chief executive Sergei Frank has told press in Russia.
Frank expects shipping markets to improve this year, following signs of a recovery seen in the final quarter of 2018, according to reports.
The Russian state-owned tanker company will wait for the right moment to list its shares, which will be supported by the market upturn, Frank said.
“We need that the markets return to their historical average. The fourth quarter was a joy for us, but it is not a record one,” Frank said, quoted by Reuters.
"Now the balance is beginning to change in the direction of the shipowners, and, naturally, this will lead to the fact that freight markets will begin to approach their 20-year, 25-year average values. At this point, the business case can be justified,” he told press.
The Sovcomflot chief executive said the signs of recovery come after a period of stagnation and "severe depression", which has lasted since 2016.
Other factors such as international sanctions placed on Russia following the country’s annexation of the Crimean Peninsula have also been blamed for delaying the IPO.
In March 2018, Sovcomflot CFO Nikolay Kolesnikov told TradeWinds that any IPO would need “overall investor sentiment towards shipping to improve and the geopolitical drama to subside”.
The Russian government has long planned to privatise a 25% stake in Sovcomflot via a share listing.
