Russian Travel Digest

Moscow Mayor's Office sells a share in Intourist with a discount of 30%

“The Moscow government again put up for sale 25.03% of stake in Intourist, trades are scheduled on September 20, 2017”, - according to the city's investment portal. The initial price of the asset is 990 million Rubles, although previously the capital expected to gain from the sale of its package 1.43 billion rubles.

The last auction for Intourist was planned to be in May 2016, but there were no candidates for the city package. Why the price was reduced - it is not known: the request to the capital's property department remained unanswered. Aleksey Tikhonov, the Head of the Practice of Accompanying of Investment Projects of "MEF-Audit" company believes, that the change in the value of the package by almost 30% is not associated with any significant changes in the financial position of the Intourist or the hotel market. “Obviously, the previous starting price for a non-controlling stake was overstated and uninteresting for investors”, - he is sure.

Intourist company partially owns and manages by eight hotels with a total number of more than 2,000 rooms in Moscow (Kosmos, Intourist-Kolomenskoe), in Russian regions (Altai Resort), in Namibia, Czech Republic and Italy, according to the Company’s report for 2016. Revenues of Intourist last year amounted 234.9 million Rubles, a net loss - 626.3 million Rubles. Its main shareholder is AFK Sistema (more than 66%), another 8.8% has VTB Hotel Company.

Director of the consulting business of CBRE Michael Johnston calls the main shareholder of the company AFK Sistema as the most logical buyer of the city package of "Intourist". The asset also may be of interest for foreign investors, for example, Chinese: they are considering the Russian real estate market for investments, but are not ready to assume the risks of individual ownership. For the players of the Russian hotel market the city package is unattractive.

The representative of AFK Sistema declined to comment. The corporation does not plan to participate in the auction at the moment - said a person close to AFK Sistema. VTB Group, according to its representative, is interested in selling of its share in Intourist.