The Russian Direct Investment Fund (RDIF) and Deutsche Bank have made a joint investment in Russia’s largest telecommunications company, Rostelecom.
The two parties will invest a total of USD237.1m on a parity basis, which will be used to further develop and strengthen the company’s market position. The transaction has received the necessary approval from Rostelecom, as well as the governing bodies of RDIF and Deutsche Bank.
As a result of the deal, the two investors will purchase 72,187,366 Rostelecom ordinary shares from its subsidiary company MOBITEL. The structure of the deal also contains agreements relating to call and put options, according to which Rostelecom is entitled a portion of the profits from an increase in value of shares. As part of the same terms investors will receive protection against a decrease in the price of the shares. The struck agreements do not assume physical settlement.
Kirill Dmitriev, chief executive of the Russian Direct Investment Fund, says: “Sustained growth in the Russian economy means demand among consumers and businesses for reliable and ultra-fast broadband will continue to increase. It is therefore the right time to invest in the telecommunications sector. This deal capitalizes on the recent changes in Rostelecom’s corporate governance and development strategies and will be another important step in realising Russia’s infrastructure potential.”
Sergey Kalugin, president of Rostelecom, says: "We are confident in the potential of our company, so it was important for us to retain the right to benefit from upside deriving from an increase in the share price. On the other hand, we are committed to improving Rostelecom’s investor base and attracting high-profile investors. We have therefore decided to offer treasury shares to help achieve this outcome. We are very pleased that we have received interest from such prominent investors as RDIF and Deutsche Bank, who are both wholly focused on further improving the value of the company. Attracting long-term partners is a key part of Rostelecom’s strategy to successfully achieve its ambitious goals and, I hope, will serve to attract other qualified investors.”
