VTB to finance purchase of Rosneft shares for the second time

VTB will give the Chinese company CEFC €5 billion using 14.6% of Rosneft shares as collateral, said VTB First Deputy President and Chairman Yuri Solovyov at the forum in Davos. The bank's CEO Andrei Kostin confirmed this.

• The Chinese company announced its intention to buy a stake in Rosneft in 2017, with the deal valued at $9.1 billion. Reuters wrote back in September that the company could take a loan from VTB for this purpose.
• CEFC is buying up shares that went to commodity trader Glencore and Qatari fund QIA during the company's privatization in late 2016. When the deal is completed, QIA will retain 4.7% of Rosneft shares, while Glencore will retain 0.5%. Rosneft CEO Igor Sechin previously explained that the companies decided to reduce their stake because it had become too expensive for them to service the loan they had taken out to buy shares in the Russian state company. The total deal value was then over €10 billion.
• The Rosneft privatization deal was complexly structured, and at an intermediate stage it was also financed by VTB, although Vladimir Putin asked Russian state banks not to finance privatization deals.
• The size of the loan does not bother VTB. "We are very comfortable with such an instrument as Rosneft shares, very comfortable with the fundamental value of Rosneft shares and the level of development of the company, the level of its reliability and fundamental value in the long term, so we are ready to lend to strategic buyers under its shares," Solovyov said in October.
• A couple of weeks after Solovyov's statement, Sberbank analysts issued their forecast for Rosneft's prospects with a recommendation to "sell" the state company's shares. Due to the harsh statements addressed to Igor Sechin, they subsequently had to soften the wording somewhat, but the main conclusions in the report remained the same. The Bell wrote about this in detail here and here .

What do I get out of this?

For you personally, this deal has no consequences. But it is still noteworthy, and we could not pass by: Rosneft is the largest Russian company and the largest taxpayer, and now its second largest shareholder, with the help of VTB, will be a mysterious Chinese corporation. Who is behind CEFC is a big secret for everyone. But VTB management, agreeing to provide such a loan, probably knows something.

Marina Bocharova, The Bell