Azerbaijani State Oil Fund concludes second deal with Russian VTB bank

Business Materials 20 May 2013 17:59 (UTC +04:00)

Azerbaijan, Baku, May 20 / Trend, E. Ismayilov /

The State Oil Fund of Azerbaijan (SOFAZ) has become a shareholder of the Russian bank VTB, Chairman of the Board of VTB Bank (Azerbaijan) Alexander Eremin told Trend on Friday.

"This testifies to the fact that Russo-Azerbaijani integration has also affected the banking sector," he said. "This action is significant from political and economic points of view. It shows that the two countries are willing to cooperate in the financial markets, and that this cooperation originates at the state level. Moreover, a partner as successful and reliable as SOFAZ is a very good shareholder for VTB. We are always glad to expand cooperation with such a partner." He added that the deal is economically advantageous for SOFAZ. Investing in a group such as VTB, one of Europe's largest groups today, is an interesting investments in terms of the diversification of its asset portfolio.

"This is not the only deal," he said. "SOFAZ's latest acquisition was Gallery Actor, mixed-use office and retail complex located on Pushkin Square in Moscow. The transaction was valued at $133 million. It was owned by VTB. We are actively cooperating with major Azerbaijani clients who are supported at the state level. We cooperate with the International Bank of Azerbaijan. The spheres of cooperation has expanded significantly since the middle of 2012. The business volume, measured in billions of dollars may become a very real figure for cooperation between VTB Group and Azerbaijan in the near future."

At present, VTB group's investment amount in Azerbaijan hits hundreds of millions of dollars.

SOFAZ told Trend that SOFAZ signed an agreement on subscribing for VTB bank's shares from additional issue on April 26, 2013.

About three percent of the shares of the new issue will be purchased for this amount at a market value.

Earlier, the State Oil Fund has announced the bank its intention to purchase shares from VTB Bank's new issue prospectus, proposing to acquire shares of the package worth the equivalent of $500 million.

According to the bank's statement, the Supervisory Board of VTB Bank announced that it had resolved to attract new capital in amount of up to Rub 102.5 billion ($ 3.23 billion) through the issuance of 2.5 trillion new ordinary shares by way of an open subscription at a price of Rub 0.041 per share.

Bank of Russia registered the decision to issue additional shares and the emission prospectus on April 26, 2013.

SOFAZ was established in 1999 with assets of $271 million. As of April 1, 2013, SOFAZ's assets amounted to over $34.325 million, or 0.6 percent more compared with the beginning of the year.

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 projected total cost (average amount) of SOFAZ's investment portfolio for 2013 was set at 25.2 billion manat, while as of late 2012 it was projected at 23 billion manat.

According to SOFAZ's investment strategy, for the first time since last year up to five per cent of the fund's total investment portfolio may be invested in stocks, up to five percent - in real estate, and five percent - in gold.

The official exchange rate on May 20 is 0.7847 AZN / USD.