SOFAZ considers all risks while investing abroad

27 November 2014 10:03 (UTC+04:00)

By Aynur Jafarova

Azerbaijan’s state oil fund SOFAZ takes into account all possible risks while planning to invest in various financial instruments abroad, in particular in the Russian market which is going through a difficult period.

SOFAZ made the statements commenting on the possible impact of the progressive devaluation of the Russian ruble and the stock market decline on the fund's revenues from assets management in Russia during the third quarter, Trend Agency said.

SOFAZ owns a real estate in Russia, and is one of the shareholders of VTB Bank.

As part of its new investment policy, pursued since 2012, SOFAZ purchased Gallery Actor, a mixed-use office and retail complex located on Pushkin Square in Moscow for $133 million.

SOFAZ owns a 2.95 percent stake in VTB Bank, the second largest bank of Russia. The cost of this acquisition amounted to $500 million.

“Despite the fact that there are significant changes in the value of shares of VTB Bank on the background of the recent events, we would like to note that in accordance with the investment policy of the fund, such investments do not pursue short-term speculative purposes, but are provided for long-term goals. Along with SOFAZ, the Norwegian Government Pension Fund (4.59 percent), Qatar Investment Fund (2.95 percent), U.S. Blackrock Fund Advisors (1,24 percent), and other significant structures are among the shareholders of VTB,” the fund noted.

Before investing in various financial instruments, SOFAZ conducts serious analysis of all possible risks, including financial ones. Along with a thorough examination of the overall credit profile of the issuer, its solvency in the long term, the level of sustainability of external shocks in the short and medium term, the fund seriously considers the factor of systemic importance of the structure in the country and the region in this process.

“Investments in Russia, as well as in other countries, are under constant control and study,” SOFAZ stressed.

SOFAZ, an entity that accumulates and manages Azerbaijan's oil and gas revenues, was established in 1999 with assets worth $271 million.

The main purposes of the fund are accumulation of funds and placement of assets abroad to minimize negative impacts on economy, prevention of the 'Dutch disease', ensuring savings for future generations, and maintaining the current social and economic standards in the country.

SOFAZ assets are placed partly in securities, money market instruments (deposits, bank accounts).