The circulation of turbines in the market – Newspaper Kommersant No. 65 (7510) dated 04/14/2023

According to Kommersant, a little-known manufacturer of electrical equipment, Moselectroshield, acquired the Ural Turbine Plant, the country’s largest manufacturer of steam turbines, from Renova’s structures, Viktor Vekselberg. The cost of the transaction amounted to about 10 billion rubles. According to some interlocutors of Kommersant on the market, the deal was made in the interests of PJSC Inter RAO, which is systematically increasing its presence in the power engineering business. In Inter RAO, negotiations with Moselectroshield do not confirm, but they talk about the continued interest in machine-building assets.

Moscow-based electrical equipment manufacturer Moselectroshield LLC closed a deal last week to buy Russia’s largest steam turbine manufacturer, the Ural Turbine Plant (UTZ), located in Yekaterinburg, according to Kommersant sources familiar with the situation.

The cost of the transaction, according to them, is about 10 billion rubles.

UTZ was founded in 1938 and manufactures steam turbines for thermal power plants, nuclear power plants and nuclear icebreakers in the Russian Federation. It belonged to the Rotek holding of the Renova group of Viktor Vekselberg. In Russia, steam turbines are made only at UTZ and LMZ sites. The change in the owner of UTZ is significant in the context of the program launched in the Russian Federation for the modernization of old thermal power plants. According to the UTZ website, the plant is involved in 22 projects to upgrade generating capacities with a total capacity of 3 GW.

The structure of UTZ owners has not been disclosed for several years. In 2018, it was reported that Renova, due to sanctions against Viktor Vekselberg, reduced its share in UTZ from 80% to 49%, Legacy Media LLC became the owner of 15% of UTZ, Yevgeny Belov had another 16%, 20% – from the chairman of the board of directors and co-owner of Rotek Mikhail Lifshits. As one of Kommersant’s interlocutors, who is familiar with the structure of the deal, explains, Moselectroshield bought up to 90% of the company’s shares, and 10% remained with Mikhail Lifshits, who will remain the head of the UTZ board of directors.

UTZ “Kommersant” did not provide any comments. Renova confirmed that the company withdrew from the capital of UTZ, refusing to comment on the conditions. In “Moselectroshchita” “Kommersant” did not answer.

According to SPARK, UTZ’s revenue in 2020 is 9.34 billion rubles, net profit is 529.49 million rubles. The volume of UTZ orders at the end of 2022 reached 63 billion rubles, Mikhail Lifshits said in an interview with TASS. Moselectroshield supplies electrical equipment to Rosenergoatom, Rosseti and Inter RAO. Revenue at the end of 2021 – 1.34 billion rubles, net profit – 112.37 million rubles, cash on the balance sheet – only 4.8 million rubles. Since the end of 2022, Moselectroshield has been 100% owned by Alexander Plakida.

Moselectroshield does not have competencies in the machine-building business and financial capabilities, so the deal was probably made in the interests of another player. Several Kommersant sources claim that Inter RAO is the ultimate beneficiary.

According to one of them, Inter RAO and Moselectroshchit are currently negotiating the purchase. However, one of the participants in the deal denies any connection with Inter RAO. Inter RAO does not confirm negotiations with Moselectroshchit, noting that engineering and mechanical engineering are strategic segments for Inter RAO and the company is “ready to discuss potential transactions with legitimate owners.”

Inter RAO has been collecting machine-building assets for some time now. Last year, the company acquired the Voronezh Transformer plant and 65% in Siemens Gas Turbine Technology (STGT, another 35% from Aleksey Mordashov’s Power Machines), previously owned by Germany’s Siemens Energy. In addition, according to Kommersant, last year Inter RAO negotiated the purchase of both Power Machines’ shares in STGT and Power Machines themselves, but the parties did not agree on a price. The company has a production site RGT, which assembles turbines under a GE license in Rybinsk. At the end of 2022, the head of Inter RAO, Boris Kovalchuk, said that the total portfolio of orders for the company’s engineering departments exceeds 150 billion rubles, which makes this business segment the largest in the Russian thermal power industry.

Independent expert Yury Melnikov recalls that Inter RAO has been developing the engineering business since the early 2010s. The purchase of Siemens Energy assets in the gas turbine and transformer business at the end of 2022 looks like a continuation of this strategy, he said. “It is logical to expect deals in relation to factories for the production of steam turbines, generators and steam boilers, since almost all projects of the modernization program concern the complete or partial replacement of this equipment,” says Mr. Melnikov.

Tatyana Dyatel