Germany's Fraport to complete sale of 25% stake in Pulkovo Airport to Orbit Aviation in next few days - company

MOSCOW. Dec 5 (Interfax) - Germany's Fraport AG plans to complete the sale of its 25% stake in VVSS Holding LLC, the parent company of the operator of St. Petersburg's Pulkovo Airport, to Middle Eastern investor Orbit Aviation LLC in the next few days, the company said on its website.

"Fraport is selling its entire 25 percent stake in VVSS Holding LLC to Orbit Aviation LLC, an investor based in the Middle East. Fraport selected the buyer within the scope of a structured transaction process. All approval processes and procedures have been successfully completed," the company said.

The completion of the share transfer only requires the registration of the change in ownership in the Russian register of companies, so the transaction is expected to be finalized within a few days, Fraport said.

"With this transaction, we're ending our involvement in Russia. Our goal has always been to find a solution for the investment that would be in the best interests of our shareholders. We are confident that this will be achieved through the sale of our stake - even if this has taken longer than originally hoped," Fraport CEO Stefan Schulte said in the press release.

"The transaction is expected to have a positive effect in the mid double-digit million euro range toward reducing the Group's net financial debt. Because of the political situation, Fraport had already written off its Russia business in full in the second quarter of 2022," the company said.

Fraport's plans to sell its 25% stake in VVSS Holding to the little-known company Orbit Aviation were announced in late October, when President Vladimir Putin issued an order granting permission the sale.

The decree did not provide any detailed information about Orbit Aviation. There is information in public sources about a company called Orbit Aviation that is based in Sharjah, United Arab Emirates. This company is described as being engaged in leasing aircraft and organizing charter flights.

VVSS Holding was registered in December 2023 and 100% of airport operator Northern Capital Gateway LLC (NCG) was transferred to it the same month by presidential decree. Prior to this, NCG was owned by Cyprus-based Thalita Trading. In 2010, when NCG, St. Petersburg and the city-owned JSC Pulkovo Airport signed an agreement on the airport's development under a public-private partnership, Thalita Trading's largest shareholders were companies controlled by Russian state bank VTB with 50% and Fraport with 35.5%.

Subsequently, Thalita Trading's ownership structure changed several times. In 2016, Fraport sold part of its stake to Qatari sovereign wealth fund QIA, and in 2017 a consortium of investors that included the Russian Direct Investment Fund (RDIF), Mubadala and Baring Vostok took a stake in the Cypriot company. As of the end of 2021, VTB's stake in Thalita Trading was estimated at 25.01%, Fraport and the RDIF with its co-investors each held 25%, and QIA held 24.99%.

After the start of Russia's military operation in Ukraine, Fraport announced plans to exit NCG. Fraport CEO Stefan Schulte was reported as saying later that the company would only be able to sell its stake after 2025 due to contractual restrictions. The value of Fraport's stake in NCG was estimated at 111 million euros.

VTB head Andrei Kostin said later that the parameters of the exit would be determined by the end of 2023, and in future this stake might be sold, as Russian and foreign investors have shown interest in it. "We've already been discussing this matter for a year. There were various buyers, there were even foreign buyers, but then they got a little spooked, so we'll see [...] Everyone who has airports in Russia is interested in Pulkovo," Kostin said.

The presidential decree issued in December 2023 to transfer 100% of NCG to VVSS Holding LLC said that the new company was being created by the government, but that its founders would be NCG's beneficiaries, who still owned the airport operator through Thalita Trading.

The decree listed VVSS Holding's owners as follows: Fraport AG with 25%; Business Finance LLC and VTB Infrastructure Holding LLC with 16.79% and 8.22%, respectively; Perspektivnye Promyshlennye i Infrastrukturnye Tekhnologii-7 LLC with 2.33%; F3 Holding LLC (Qatar) with 24.99%; Thirty Seventh Investment Company LLC (UAE) with 7.99%; Nomeliar Ltd (Cyprus) with 7.48%; Ayar International Investments Company (Saudi Arabia) with 3.5%; Bahrain Mumtalakat Holding Company (Bahrain) with 1.26%; Felmen Ventures Limited (Virgin Islands) with 1.05%; Zamoralo Holdings Ltd (Cyprus) with 1.04%; Co-Investment Partnership 1, L.P. and Co-Investment Partnership V, L.P. (Cayman Islands) with respectively 0.17% and 0.16%; and Mevelida Ltd (Cyprus) with 0.02%. The stakes of the main shareholders of the new company generally correspond to the previously known stakes of Thalita's largest shareholders.

Fraport operates airports in various parts of the world, including Frankfurt, Antalya, Burgas, Ljubljana and Lima.

Pulkovo Airport handled a record 20.4 million passengers in 2023 and became the second largest airport in Russia by passenger traffic after Moscow's Sheremetyevo. NCG expects traffic to grow to 21 million passengers in 2024. The St. Petersburg airport's anchor carrier is Rossiya Airlines, a division of Aeroflot Group .