Azerbaijani State Oil Fund plans to invest in VIP real estate in Moscow

Photo: Azerbaijani State Oil Fund plans to invest in VIP real estate in Moscow  / Oil&Gas

Azerbaijan, Baku, Nov. 21 / Trend J. Nasibova /

The Azerbaijani State Oil Fund (SOFAZ) plans to buy property in the center of Moscow, Russian Trade Representative in Azerbaijan Yuri Shchedrin told media today.

"SOFAZ plans to buy VIP-estate in Moscow to implement business activity," Shchedrin said.

He said that SOFAZ's recent decision on asset placement in rubles in the Russian financial market testifies to the trusting relations between the parties.

He added that SOFAZ will place around $500 million in the Russian financial market in the near future.

"The first stage envisages the placement of 3 billion rubles or about $ 100 million through Gazprombank," he said. "The negotiations on SOFAZ's placing the ruble assets are being held with Russian bank VTB, Vnesheconombank, Russian Agricultural Bank and Savings Bank."

According to the new investment strategy, the State Oil Fund of the Azerbaijani Republic began investing in assets denominated in Russian rubles on October 19, 2012. At present, SOFAZ's investment portfolio includes only short-term deposit in the Russian "Gazprombank" to the amount of 3 billion rubles ($ 100 million).

SOFAZ plans to expand its ruble portfolio to $300 million by late 2012. The list of banks, in which the deposits will be placed, is planned to be expanded to diversify the ruble portfolio.

The currency structure of SOFAZ's investment portfolio is determined as follows: 50 percent of the assets can be placed in U.S. dollars, 40 percent - in euro and 5 percent - in pounds sterling. The remaining 5 percent of the total value of SOFAZ's investment portfolio may be represented in the currencies of the "G7" countries, the countries with long-term ratings at least "A" (Standard and Poor's, Fitch Ratings) and "A2" (Moody `s), Russia and Turkey.

SOFAZ assets, as of Oct. 1, 2012, increased by 11.4 percent up to $33.192.4 billion compared to early 2012 ($29.8 billion).

It is predicted that by late 2012, SOFAZ assets reach the level of $34 billion.

SOFAZ was established in 1999 when its assets amounted to $271 million.

The main purposes of the fund are: accumulation of funds and placement of the fund's assets abroad to minimize the negative impact on the economy, preventing a "Dutch syndrome" to ensure savings for future generations and to maintain the current socio-economic standard in the country.

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