Stone House Capital Partners returned 4.1% for September, bringing its year-to-date return to 72% net. The S&P 500 is up 14.3% for the first nine months of the year. Q3 2021 hedge fund letters, conferences and more Stone House follows a value-based, long-long term and concentrated investment approach focusing on companies rather than the market Read More
AP Moeller – Maersk A/S (CPH:MAERSK-B) (CPH:MAERSK-A) invests through APM Terminals the largest foreign investment in the Russian transport sector according to a press release from the Russian firm Global Ports. The value of Global Ports is estimated at 2.9 bio. USD, and APM Terminals buys 37.5% of the shares – which is half of TIHL’s present shareholding. Mærsks investment is equivalent to 5 bio. DKK (1 bio. USD)
APM Terminals og TIHL, known as N-Trans, furthermore reduce their number of votes in the company where 25% of the share are in free trade. These shareholders will after APM Termials have 40% of the votes in Global Ports.
According to Global Ports homepage the company has at present 30% of the Russian markets container traffic. Simultaneously they handle 23% of the oil for fuel export in the Baltic from the former Russian oil market.
This is hardly surprising to regular readers of ValueWalk.
It is no secret that AP Moeller – Maersk A/S (CPH:MAERSK-B) (CPH:MAERSK-A) has for many years entertained ambitions in the Russian trade. Scarcely had the Soviet Union collapsed before AP Moeller – Maersk A/S (CPH:MAERSK-B) (CPH:MAERSK-A) opened an office in Sct. Peterburg. The idea was clearly to use the trans-sibirian railroad as an alternative to sea transport to the Pacific. Nothing much came of that, as the Russian rail system is really, really terrible – I mean terrible: Whole trainloads disappear into thin air in Russia. Locomotives by the dozens simply cannot be found. Pilfering is one thing, but what possible use can pickpockets have for a locomotive? So AP Moeller – Maersk A/S (CPH:MAERSK-B) (CPH:MAERSK-A) closed the office after a couple of years.
What has changed in the area these last 20 years is that there has gotten some sort of organisation into the region. The three Baltic states have shown remarkable character: On the one hand they have managed to get their own houses in reasonable working order, on the other hand they have shown themselves to be able to cooperate (commercially and security wise) .
The biggest problem was actually Sweden, where the US President (I believe it was Bush) called the (then) Swedish PM Göran Persson on the carpet, asking him what the #¤&&% he was thinking he was doing? The Swedes sort of piped down after that and a few exceptionally tactless and stupid remarks from the Swedish king.
Russia seems resigned to the fact that if they want to achieve anything, they need professional help. The Russian export – and import – are far, far too important to mess around with. What Russia wants is: No problems. No pirates, no sabotage, no shipwrecks, no pilfering in ports, no illicit drug trafficking – reasonable levels of corruption.
In order to achieve that Russia will need the Baltic countries and Denmark. It will cost them a fair penny; but the alternative is simply too inadequate to contemplate – the endless misery with the oil export through Ukraine will remain a staunch reminder. What is needed is not a naval task force with marines; but a corps of traffic cops. Mærsk is not cheap; but they will get the job done.
The outstanding problem is what happens after the goods have been landed in the port – last time I looked the Russian rail system was in severe need of improvement.