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 Shamalov is a major shareholder in Sibur, Russia's largest
processor of petrochemicals. This month Sibur obtained $1.75 billion
from Russia's National Wealth Fund to help build a huge new plant in
Tobolsk, Siberia.
According to corporate documents, Sibur was able to borrow the money
at a current interest rate of 2 percent. That is a bargain,
according to financial analysts. Artyom Usmanov, an analyst at
investment firm BCS, said borrowers on the Russian bond market would
expect to pay over 7 percent interest for such a loan. Irina
Alizarovskaya, an analyst with Raiffeisenbank called the financing
"quite cheap."
Shamalov did not respond to a request for comment.
In a statement by Sibur on Dec. 9, Dmitry Konov, its chief
executive, described the state finance as having "favorable terms."
A Sibur spokesman said the company had no information "about family
relations or relations between the company's shareholders and the
president of Russia." The state loan, he said, "underwent all
necessary procedures and was approved in strict accordance with the
... laws."
The country's National Wealth Fund, which was valued at the start of
2015 at 4.8 trillion roubles (then $72 billion), typically invests
in national infrastructure projects such as railways, nuclear
technology and major roads. Prime Minister Dmitry Medvedev issued a
decree in October to add the petrochemical plant to the list of
projects in which the fund can invest. The decision, Medvedev said,
would reduce "dependence on imports" and create up to 15,000 jobs.
The state money forms part of the overall $9.5 billion cost of
Sibur's Siberian project, which is known as ZapSibNeftekhim, or
ZapSib. Sibur has said in public announcements that the plant will
be the "largest modern petrochemical facility in Russia" and create
a world-class facility for making chemical products from Siberian
gas supplies.
The development is central to Sibur's future – and to the value of
Shamalov's stake in the company. In 2012, when design work began,
Sibur's chairman Leonid Mikhelson said ZapSib would "change the
image of the company and the Russian petrochemical sector."
After Shamalov married Putin's daughter in 2013, he increased his
stake in Sibur five-fold and the company invested more heavily in
the ZapSib project. As Reuters detailed earlier this month, Shamalov
acquired a 17 percent stake in Sibur in September 2014, making him
the second largest shareholder in the company, with a total stake of
21.3 percent. That investment is now worth $2.85 billion, judging by
recent share deals.
Later in September 2014, Sibur said capital expenditure on the
ZapSib project would increase from 53 billion roubles ($1.4 billion
at the time) to 74 billion roubles.
In February this year, Sibur said the foundations for the plant had
been laid. On Dec. 4, the company raised $1.75 billion from the
state by issuing 15-year bonds with an interest rate of either 2
percent or the U.S. annual consumer price inflation plus 1 percent,
whichever is higher. Annual U.S. consumer price inflation in
November was 0.5 percent.
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The bonds were all bought by the state via the National Wealth Fund.
The decision to make the loan was made by the state-controlled
Russian Direct Investment Fund (RDIF), which said the project "fully
complies with the rules for investing NWF money in infrastructure
projects" and gives the fund, whose loan is less than 20 percent of
the project's total cost, "maximum protection and corresponding
profitability." RDIF said ZapSib "is one of the most promising
projects in the world."
A spokeswoman for the Russian Ministry for Economic Development,
which nominates projects for NWF funding, said the Sibur bonds would
be profitable in rouble terms, and that the state investment helps
attract foreign investment as well.
Sibur has also borrowed $3.3 billion from European banks.
To develop ZapSib, Sibur is working with Linde Group, a gas and
engineering company based in Germany, and INEOS, a chemical company
based in Switzerland. Neither company responded to requests for
comment.
The plant is designed to produce 1.5 million tons of ethylene, which
is used to make consumer and industrial products, from kitchenware
to water pipes. Analysts at Moody's estimate the project could boost
Sibur's revenues by 25 to 30 percent to about $11 billion a year.
Another major shareholder in Sibur is the billionaire oil-trader
Gennady Timchenko, who is an old friend of Putin. Timchenko is also
a major shareholder in another company – Novatek – that has gained
finance from the National Wealth Fund. A Wealth Fund list shows
Novatek and Sibur as the only private companies that have been able
to raise money this way.
Novatek did not respond to a request for comment.
Following Russia's annexation of Crimea in 2014, Kirill Shamalov's
father, Nikolai, was sanctioned by the European Union for being "a
long-time acquaintance" of Putin and for benefitting from his links
with "Russian decision-makers." The sanctions restrict travel rights
and freeze assets within the EU. Timchenko was sanctioned by the
United States.
But Kirill Shamalov and Sibur have not been sanctioned.
The U.S. Treasury did not respond to a request for comment on
whether it had considered sanctioning Sibur and Kirill Shamalov. EU
officials told Reuters earlier this month that there had been no
discussion about expanding the Union's sanctions list.
(Kuzmin and Zavyalova reported from Moscow, Grey from London; Edited
by Richard Woods and Simon Robinson)
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