Fraport Sells its Stake in Pulkovo Airport

Germany-based transport firm Fraport AG, one of the leading companies in the global airport business and active at 30 airports on four continents, on Thursday said that it was exiting Russian market with the completion of the sale of its stake in St. Petersburg’s Pulkovo airport in Russia in a few days.

The concession for the operation of Pulkovo Airport began on 29 April 2010 with a contractual term of 30 years. Fraport is now selling its entire 25% stake, which was valued at $117.42 million, in VVSS Holding LLC to Orbit Aviation LLC, an investor based in the Emirate of Sharjah in the UAE.

Fraport, which is known as Frankfurt Airport Services worldwide, selected the buyer within the scope of a structured transaction process. All approval processes and procedures have been successfully completed.

A corresponding share purchase and transfer agreement has been concluded and the completion of the share transfer only requires the registration of the change in ownership in the Russian register of companies. The transaction is expected to be finalized within a few days.

Fraport CEO Dr Stefan Schulte said that with this transaction, they were ending Fraport’s involvement in Russia.

“Our goal has always been to find a solution for the investment that would be in the best interests of our shareholders. We are confident that this will be achieved through the sale of our stake – even if this has taken longer than originally hoped,” he said.

Fraport suspended its activities at the airport in St. Petersburg immediately after the start of Russia’s war against Ukraine. With the anticipated completion of this transaction, the company will end its 14-year commitment in Russia and will focus on its global growth strategies.

Positive Effect

The transaction is expected to have a positive effect in the mid double-digit million euro range toward reducing the Group’s net financial debt. Because of the political situation, Fraport had already written off its Russia business in full in the second quarter of 2022.

Fraport’s management of Saint Petersburg Pulkovo Airport, where it was a major part of the consortium that took it under concession with a large stake in 2010, has taken several twists and turns since then, with a difficult acquisition at first proving to be a high performer.

According to reports, Russian President Vladimir Putin took control of Pulkovo airport from a foreign company and the Russian government created VVSS Holding LLC to manage Pulkovo Airport by issuing a decree.

VVSS Holding was registered in December 2023 and 100% of airport operator Northern Capital Gateway LLC (NCG) was transferred to it the same month by the Presidential decree.

Prior to this, NCG was owned by Cyprus-based Thalita Trading. In 2010, when NCG, St. Petersburg and the city-owned Pulkovo Airport signed an agreement on the airport’s development under a public-private partnership, Thalita Trading’s largest shareholders were companies controlled by Russian state bank VTB with 50% and Fraport with 35.5%.

Subsequently, Thalita Trading’s ownership structure changed several times. In 2016, Fraport sold part of its stake to Qatari sovereign wealth fund QIA, and in 2017 a consortium of investors that included the Russian Direct Investment Fund (RDIF), Mubadala and Baring Vostok took a stake in the Cypriot company.

As of the end of 2021, VTB’s stake in Thalita Trading was estimated at 25.01%, Fraport and the RDIF with its co-investors each held 25%, and QIA held 24.99%.