Changes afoot at Eurocement?

Changes afoot at Eurocement?
Published: 20 December 2006

Changes afoot at Eurocement?
Market speculation as to the possibility of Filaret Galchev re-aligning some if not all Eurocement Group’s wide diversity of Russian and Ukranian cement assets is gathering some credence among Moscow insiders. Adding an extra twist are the unconfirmed reports that Roman Abramovich (now owner of Chelsea Football club)  is interested in picking up the 44 per cent stake in the subsidiary Eurocement held by the US investment fund Russia Partners. Earlier Russia Partners felt that they had been cheated out of their rightful stake in Eurocement and last year reportedly offered their stake to local investors for just US$120m after losing a legal battle with the Moscow courts, but since that time, with Russian cement markets on a strong upward trajectory, Russia Partners are now said to be looking for over US$300m for this same minority shareholding in order to secure their own profitable exit strategy.

Much of the assets acquired by Galchev are now effectively owned by quasi-state-owned Russian investment banks, and these somewhat shadowy figures, may now, with some political encouragement, take Eurocement in a new direction, especially after a possible injection of funds by Roman Abramovich, who remains on good terms with Russia’s leadership and President Putin in particular.

Whether Filaret Galchev, the CEO of the Eurocement Group, might then leave Eurocement, personally enriched by a sizeable cash windfall, to pursue other interests, is also conjectural. He still believes the Eurocement Group still has a long way to go in investing to upgrade and modernise its range of assets and earlier he recommitted himself to such projects. However this is not a one-man operation, and with other sizeable shareholders in the background, not least Yuri Shirmankin and a Mr Krasmyamsky who can trace roots back to Eurocement’s own beginnings – Stern Cement – Galchev may now be under pressure to restructure the whole group in a manner best suited to the behind-the-scenes political controllers.

As a strategic industry the Russian government could well, in the present political climate, be unwilling to let Eurocement break free and find partnerships with other foreign groups. Hence it will be in everyone’s interest for the US Russia Fund to come to some kind of deal with a sympathetic local group and thus the possible Abramovich connection, a multi-billionaire, who might be keen to further develop a strategic portfolio back in Russia. Watching Chelsea week in, week out, can hardly provide the requisite intellectual and financial stimulus for a man of his capabilities.