RUSSIA. Moscow Sheremetyevo Airport is conducting due diligence on incorporating several joint ventures held by TPS Avia into the airport company. If the project proceeds TPS, which partners with Gebr Heinemann in Imperial Duty Free, will gain a sizeable stake in the airport.

The consolidation was reported in Russian press earlier in the week and confirmed by The Moodie Report this morning.

TPS operates cargo and passenger terminals as well as other ancillary services at Sheremetyevo. In October 2013, it was selected to partner with the airport in its Northern Terminal Complex development project. TPS will invest more than US$600 million in the construction of a new passenger terminal, a cargo terminal, a refuelling complex and a tunnel linking the passenger terminal to three others (Terminals D, E and F).

TPS Avia and Gebr Heinemann operate Imperial Duty Free at Moscow Sheremetyevo Terminals D and E

The companies under due diligence include Imperial Duty Free, Sheremetyevo Cargo Complex, Aeroport Moskva, Avtopark M, SIA Reklama, Terminal B Sheremetyevo, Mezhterminalny Perekhod Sheremetyevo, and Aero-Sheremetyevo.

Under the current plan, once a valuation has been determined the joint ventures will become part of the joint-stock company Moscow Airport Sheremetyevo Holdings, with TPS taking a corresponding share in that company. Given the scale and number of businesses involved, it is likely to be a significant stake.

Imperial Duty Free was formed in October last year and operates retail outlets in Sheremetyevo Terminals D and E. Heinemann is responsible for store operations and product supply.

While the deal under consideration does not directly relate to other duty free operators at the airport, a greater stake in the airport would give TPS an important voice in the development of the airport’s duty free business.

TPS Avia is part of the construction, infrastructure and commercial real estate company TPS Group. One concern that is likely to be considered in the due diligence process – and one that has already been raised by Russian press – is the potential fundraising problems faced by TPS co-owner Arkady Rotenberg, who is on a list of Russians under economic sanctions by the USA in the wake of the Crimea crisis.