Ukraine developments affect profitability of SOFAZ assets in Russia

Photo: Ukraine developments affect profitability of SOFAZ assets in Russia 
 / Finance

Baku, Azerbaijan, May 20

By Emil Ismayilov - Trend:

The value of equity portfolio of Azerbaijani State Oil Fund (SOFAZ) decreased in the first quarter of 2014, due to the developments in Ukraine, according to a message from the fund.

"Despite the income from different investments the losses from managing assets of the fund for January-March 2014 amounted to 1.8 mln. manats," SOFAZ said.

The fund also said that in the following months the revenues from managing assets of the fund totalled 87.8 million manats for the January-May 15, 2014 period as a result of stabilization and growth in the prices of equities of Russian companies.

Under the new investment strategy, the SOFAZ 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 three billion rubles (nearly $100 million).

SOFAZ owns 2.95 percent of shares in the Russian VTB Bank. The cost of purchase of this share in the bank was $500 million.

Aside from that, SOFAZ owns the Gallery Actor - a trade and office center located on Pushkin Square in Moscow. It was purchased by the fund at $133 million. SOFAZ was established in 1999 with assets of $271 million.

The assets of SOFAZ as of April 1, 2014 have grown by 2.07 percent compared to early 2014 ($35,877.5 mln.) and stood at $36,618.4 mln.

Based on SOFAZ's regulations, its funds may be used for the construction and reconstruction of strategically important infrastructure facilities, as well as solving important national problems.

The main purposes of the fund are the accumulation of funds and the placement of these fund's assets abroad to minimize negative trends in the economy by preventing 'Dutch disease'.

This ensures savings for future generations and the continuity of the country's current socio-economic standard.

The official exchange rate in Azerbaijan is 0.7844 AZN/USD as of May 20.

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