AFK Sistema officially announced its purchase of Investlesprom holding

Vladimir Yevtushenkov’s Sistema group of companies officially announced acquisition of Investlesprom assets on April 4. It is one of the largest timber industry companies in Russia. Legal completion of the transaction requires the consent of the antimonopoly authorities, which is expected to appear until the end of the third quarter of 2014. Sistema has established a separate subsidiary company Lesinvest LLC to manage the acquired assets.

The deal includes all enterprises of Investlesprom: Segezha PPM, Sokolsky PPM, Segezha LDK, Karelia DSP, Sokol DOK, Onega LDK, Vyatsky plywood mill and logging enterprises in Karelia, Arkhangelsk, Vologda and Kirov regions.

“We buy a business that works and has growth prospects, and generates 50% of its proceeds from exports, which is also important, it has about 40% of the European market in paper bags,” explained Sistema president Mikhail Shamolin.

The company intends to streamline the operations of the acquired assets. In particular, as stated by the PR director of Sistema Eleonora Veitsman, the Polar Bear project requires rethinking. This investment project was based at Segezha PPM and comprised the construction of new pulp capacity.

Sistema plans to invest $30-60 million into enterprises of Investlesprom annually. In addition, the company prepared a number of investment draft projects of new capacities.

Experts of Greenpeace Russia, however, are confident that the top management of AFK Sistema does not realize quite adequately the situation in the Russian forest sector. “Sistema managers imply that in Russia there is considerable potential for increasing softwood logging and that coniferous wood will remain cheaper than in Northern European countries. These naive ideas will be broken pretty quickly in Russia’s harsh reality, and the management of Sistema will see this very quickly (one to two years should be enough),” supposed Greenpeace Russia spokesman.