Azernews.Az

By Aynur Jafarova

Azerbaijan's state oil fund SOFAZ has said it plans to acquire shares worth $500 million in VTB, Russia's second-largest bank.

"The State Oil Fund has informed VTB Bank of its intention to purchase shares of its new issue prospectus, and proposed to acquire stock worth the equivalent of $500 million. This amount will allow purchasing about three percent of shares of the new issue at market value," SOFAZ told Trend news agency on Monday.

According to the bank's statement, the Supervisory Board of the VTB Bank announced its decision to draw additional funds in the amount of up to 102.5 billion rubles ($3.23 billion) through the issuance of 2.5 trillion shares by an open subscription at a price of 0.041 rubles per share.

The Russian bank registered its decision to issue supplemental shares and prospectus on April 26, 2013.

Along with SOFAZ, VTB Bank has secured firm commitments from a group of investors comprising existing and new shareholders, including Norges Bank Investment Management of Norway and Qatar Holding LLC, to participate in the subscription for the entire amount of the supplemental shares within the offering.

In accordance with legislation, VTB Bank's existing shareholders have pre-emptive rights to acquire supplemental shares at the price of offering. The pre-emptive rights' period is expected to be extended from May 6 to May 17, 2013.

VTB Bank expects that Russia's Federal Agency for State Property Management (FASM) will not participate at the offering within the exercising of its pre-emptive rights, which could result in a decrease of the current share of FASM from 75.5 percent to 60.93 percent after the placement of all the extra shares.

The attraction of additional financial resources will increase VTB Bank's indicator of the sufficiency of basic capital and the indicator of sufficiency of its own funds as of December 31, 2012 to approximately 11.9 percent and 16.3 percent, respectively, following the placement of all the supplemental shares.

SOFAZ was established in 1999 with assets of $271 million. As of April 1, 2013, the assets of the fund 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 placement of assets abroad to minimise the negative impact on the economy, preventing the 'Dutch disease', to ensure savings for future generations, and to maintain the current social and economic standards in the country.

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

According to SOFAZ's investment strategy, up to five percent of the fund's total investment portfolio may be invested in stocks, up to five percent - in real estate, and another five percent in gold.

It was earlier reported that SOFAZ is planning to invest around $1 billion in the purchase of real estate in the Asian markets in 2013. The fund is currently considering the possibilities of investing in commercial real estate in Singapore, China, Japan, South Korea, Hong Kong and Australia.

SOFAZ has acquired the Gallery Actor, mixed-use office and retail complex located on Pushkin Square in Moscow for $133 million, an office complex in London's West End for £177.35 million and a €135 million property in Paris.

Furthermore, SOFAZ buys gold on the London Metal Exchange. The fund began buying gold in the first quarter of 2012. The amount of purchased gold was 18.356 tons (590,146 ounces) as of April 1, 2013. According to the plans, the fund buys gold in batches, and this process will take place over two years.

Gold delivered to the country will be initially stored in the vaults of the Central Bank of Azerbaijan. It is also planned to construct a vault for the storage of valuables in the new administrative building of SOFAZ. The gold will be stored in this vault after the building is commissioned.