On February 15th, 2018 came the official announcement about the conclusion of the sale of 26% (minus one share) of the Kalashnikov Concern group from Russian state-owned ROSTEC corporation to a private investor. As a result of this deal, 75% minus one share of the Kalashnikov group now belongs to Alexey Krivoruchko, general director of the Kalashnikov group. Blocking stock of 25% plus one share remains in the possession of the Russian government, through the ROSTEC corporation. The deal was approved by the managing board of the Kalashnikov group and by the Russian government.
It must be noted that until 2014 Kalashnikov group, founded in 2013 by merging two key factories in Izhevsk, IZHMASH and IMZ (Izhevsk Mechanical plant), was fully owned by Russian government. In 2014, 49% of the Kalashnikov group stocks were sold to private investors for 1,3 bln rubles. During the following 3 years, price of each share rose more than 100%, a clear sign of success.
2018: Privatization for Kalashnikov Group
Private investors helped to increase effectiveness of the manufacturing processes, decrease costs and significantly improve labor effectiveness, introducing more modern manufacturing technologies and entering new market segments. Kalashnikov group constantly improves its market presence, stepping into new markets such as ship-building, unmanned ground and air vehicles, and more. In 2017, Kalashnikov group increased its revenue from sales to civilian markets by 57%, compared to previous year.
At the same time Kalashnikov group retains and strengthens its position as a leading defense manufacturer for Russian armed forces and law enforcement, foreign military and security services. Through its blocking share Russian government still maintains necessary control of this essential supplier of defense and security equipment, which is very important for Russia.
It must be noted that despite certain allegations this sale can hardly be considered as an attempt to avoid or circumvent economic sanctions, imposed by US and EU officials on the Kalashnikov group for its important role in Russian defense industry. Original decision to partially privatize the group was made in 2013, well before political events that caused the sanctions. Kalashnikov group will retain its role of key defense supplier to the government of Russia, with Russian state interests, security and public safety being key priorities for the entire group.