President Vladimir Putin ordered the transfer of all the rights to managing St. Petersburg’s Pulkovo airport from foreign shareholders that include Germany’s Fraport AG and the Qatari wealth fund by shifting their stakes into a new Russian entity.
Under a decree published late Thursday, shareholdings in the Cyprus-registered concession that runs the airport of Russia’s second-largest city will be consolidated in a new domestic company. Existing investors, which also include a consortium with Abu Dhabi sovereign fund Mubadala Investment Co., will retain their stakes but won’t be able to vote because those rights will be held only by Russian shareholders in the new company.
German airport operator Fraport, the Qatar Investment Authority, and Russia’s VTB Bank each hold about 25% of Pulkovo’s concession. The remainder is controlled by a consortium of investors including Russia’s sovereign wealth fund, RDIF, Mubadala and Baring Vostok, according to the Interfax news service.
The measures taken in Pulkovo differ from earlier Kremlin moves to seize assets from companies of so-called unfriendly countries following Russia’s February 2022 invasion of Ukraine. Putin’s decree raised the possibility that stakeholders’ voting rights can be restored “upon their application, subject to the conclusion of corporate agreements with other participants in the company and upon the assumption of obligations to comply with Russian legislation.”
That potentially opens the door for the Middle East investors to restore their voting rights.
Russia has been wresting control over local operations of several international holdings, in retaliation for measures taken abroad to punish the Kremlin over the war in Ukraine. It seized Russian plants owned by Danone SA and Carlsberg A/S in July and installed allies of Putin to run them. Russia also took control of utilities owned by Finland’s Fortum Oyj and Germany’s Uniper SE.
Those takeovers were based on legislation Putin signed in April that allowed the Kremlin to impose temporary state control over the assets of companies or individuals from “unfriendly states” including the US and its allies that are helping Ukraine to defend itself.
The decision on Pulkovo relied 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,” according to the order published late Thursday.
Putin also told the government to create a new management body for the operator of Pulkovo. The airport in his home city is the second busiest in Russia by passenger turnover after Moscow’s Domodedovo, serving 17.5 million passengers through October this year. St. Petersburg also has a military airport, Levashovo.
Fraport is evaluating the consequences of the Kremlin’s decision, a spokesman said. The company has already written down the value of the holding to zero following the attack on Ukraine, and there’s been no interaction with Russia or any transfer of money in either direction since then, he said.
QIA and Mubadala declined to comment.
Pulkovo airport welcomed Putin’s order, saying it would “restore corporate governance mechanisms,” RIA Novosti reported, citing the company’s statement.
--With assistance from Benedikt Kammel and Nicolas Parasie.
(Updates with details from fourth paragraph.)
