Information on recent projects – Valuation of a 100% stake in Turkmenistan Airlines OJSC.
Valuation of a 100% stake in JSC Turkmenistan Airlines
We strive to provide services only at the highest professional level and achieve this by involving professional performers, the direct participation of managers in each project, as well as the use of a multi-level quality control system.
In 2015, the leading specialists of Valrus Ltd. took part in a unique project to evaluate a 100% stake in Turkmenistan Airlines OJSC as part of its corporatization and separation from the state national service, which united the carrier, airport, support services and management of the entire industry. After the decision was made on the liberalization of air transportation and the gradual transition to market economic conditions, along with the admission of a number of foreign carriers (Turkish Pegasus and Luxembourg Cargolux) to the Ashgabat airport, it was decided to separate the airline and corporatize it.
The leading national appraisal company Turkmen Expert (Head of Appraisal Sergey Mineev) was selected as the appraiser for this task. Since the process of economic liberalization is just beginning in Turkmenistan, in particular, the institution of private ownership of real estate and industrial assets is just being formed, local companies had very limited experience in assessing commercial facilities and enterprises (businesses). On the basis of contacts established through RICS, Russian evaluators were invited as external experts, who carried out the methodological management of the project. The tasks of the WALRUS experts included:
- formation of a task for evaluation,
- project budgeting advice,
- determination of the required composition of the project team, work schedule and distribution of work,
- selection of the assessment methodology to be applied,
- assessment of aircraft, including various types of Boing (717-22K, 717-200, 737-82K, 737-341, 737-700, 737-800, 757-200, 777-20LR), Il-76 and Mi- 8, Mi-17 and Eurocopter Super PUMA AS 332,
- business valuation using income approach,
- consultations and control of the results of work at all stages,
- checking the report.
The total duration of the project was over 2 months. An important part of the work at the initial stage was the inventory of the company's assets, including aircraft, spare parts and other inventory. This made it possible to successfully form a separation balance sheet and eliminate conflicts regarding the composition of the property transferred to the airline and, accordingly, the acceptance of the assessment at the final stage.
The valuation of the business was carried out using a cost approach with valuation of all fixed assets, primarily aircraft, at market value, as well as an income approach using the DCF method with a forecast of air traffic volumes, revenues and expenses of the airline.In the assessment and analysis of the market, the great difficulty was that in connection with the closeness of Turkmenistan and very limited statistical data about the economy, it is almost impossible not to obtain data on the volume of transportation in various areas, but even to obtain reliable inflation data. I had to use data from various sources, including a partial examination of the World Bank and EBRD.
At the final stage of the work, the head of the company Valrus Pavel Kartsev, Ph.D., Mrics personally took part in the completion of the calculations and the formation of the report in the office of Turkmen Expert in Ashgabat. The result of the work was the successful submission of the report to the state customer. The report was made in Russian, and later transferred to Turkmen and English.
Using this report, the enterprise was carried out and the Turkmenistan Airline OJSC was formed. Subsequently, in 2017, the airline shares were distributed between the State National Service of Turkmenhovalery (70 percent), the Ashgabat International Airport (27 percent) and the main air message service (3 percent). The uniqueness of this work is successful international business and professional cooperation, which undoubtedly happened, and we are ready to continue it and help solve complex consulting and evaluative tasks for colleagues from other countries where our experience and international qualifications can bring significant competitive advantages to local partners. But not only that.
It is also important here to note that Turkmenistan is the most closed country in the post -Soviet space, and it is quite difficult to obtain a visa for entering the country. To issue a permit for entry, the consent of the Ministry of Economy of Turkmenistan to attract a foreign expert was originally obtained, an invitation to enter and a request from the ministry to the migration service was drawn up. This is why everything went quickly and without complications, while even leading bloggers and travelers such as Ilya Varlamov and Tyoma Lebedev could not get a visa for years.