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Presented by: VTB Bank, Custody

March 25, 2021 Issue No. 2021/11

Market News

Bank of Russia issues first depository activity licence to a registrar On March 10, 2021 the Bank of Russia for the first time over the entire history of the financial market issued a depository activity licence of a professional securities market participant to an organisation licenced to maintain a security holders register — JSC KRC Registrar. Taking into account the financial market’s needs, in July 2020 appropriate amendments were introduced into the law on the securities market, which made it possible for the registrar to expand its list of services.

Company News

MTS board approves RUB 15 bln share buyback program On March 19, 2021 it was stated that at a meeting held on March 18 the board of directors of major Russian mobile operator MTS had approved a RUB 15 bln share repurchase program, including shares of common stock represented by ADSs. The company also said it will disclose additional details regarding the buyback program prior to its start.

MTS sets up ESG committee in board of directors On March 19, 2021 it was stated that Major Russian mobile operator MTS had established a Committee on Corporate Governance, Environmental, and Social Responsibility (ESG) in the board of directors to strengthen its role across corporate governance, environmental initiatives, and corporate social responsibility. The committee, which will develop MTS’ forward-looking ESG strategy, will be chaired by Independent Director Regina von Flemming and will also include Board members Valentin Yumashev, Konstantin Ernst, and Artyom Zassoursky

PIK Group SPO possible in foreseeable future On March 22, 2021 CEO and core owner of Russia’s largest real estate developer PIK Group Sergei Gordeyev said in an online conference that the company does not rule out floating shares in a secondary public offering (SPO) in the foreseeable future. Gordeyev said that there is consistent demand for the company’s shares, and the management is positive about the idea of SPO. Vice President for Capital Markets and Corporate Finance Yury Ilyun said that PIK Group was considering different options of boosting liquidity. Gordeyev own 59% in PIK Group, while VTB Bank owns 23%, Promsvyazbank 7%, while the rest is in free float.

GV Gold may sell shares at RUB 1,650–2,050 apiece in IPO On March 23, 2021 it was stated that Russian gold producer GV Gold may sell shares at a price of RUB 1,650–2,050 apiece during an initial public offering (IPO). The offer is expected to consist of approximately 37% of the total number of shares in circulation, while the volume may be reduced in connection with the buyback of shares in the course of stabilization. Bids are to be collected from March 23 till March 29, and the final price will be announced approximately on March 30. The offer will include shares of the core shareholders – Sergei Dokuchayev, Natalya Opaleva, Valerian Tikhonov, Sergei Vasilyev, BlackRock Global Funds, and BlackRock Gold and General Fund. A source familiar with the matter told PRIME earlier that the company planned to raise up to USD 500 mln from the IPO. The Exchange plans to start trading GV Gold's common shares after its IPO on March 30, the trading floor said in a statement

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Sogaz buys 6.25% in Sibur indirectly held by Mikhelson On March 23, 2021 it was stated that Russian insurance company Sogaz had bought 6.25% in petrochemical company Sibur Holding indirectly held by independent gas producer ’s CEO , chairman of the holding’s board of directors. As a result of the transaction, there are no violations of covenants and other restrictions at the level of Sibur Holding or in relations between shareholders of the company. Mikhelson remains the main shareholder of the company and will continue to chair its board of directors. Following the deal, Mikhelson holds 42.23% in Sibur, has 17%, current and former management of Sibur has 14.5%, China’s Sinopec has 10%, Silk Route Fund owns 10%, and Sogaz has 6.25%.

RDIF buys part in Mubadala’s USD 75 mln investment in Telegram bonds On March 24, 2021 it was reported that the Russian Direct Investment Fund (RDIF) had acquired a minority part in Mubadala Investment Company’s investment in Telegram’s 5-year convertible bonds under the joint Russian–United Arab Emirates investment platform. Telegram founder Pavel Durov said the messenger raised more than USD 1 bln from the sale of its bonds to a number of large investors from all over the world, which will help the company grow while keeping its independence. Media reported that UAE sovereign funds Mubadala Investment and Abu Dhabi Catalyst Partners had invested in Telegram’s bonds USD 75 mln each. A source told reporters that the bonds were placed with a 7% yield, and the offer provoked rush demand with only qualified investors admitted. Bondholders will be able to convert the securities into Telegram’s shares if it holds an initial public offering (IPO) with a 10% discount to the placement price.

Metalloinvest redeems RUB 15 bln of bonds ahead of schedule On March 23, 2021 it was stated that Russian metals holding had redeemed exchange bonds of the BO-02 and BO-03 series totaling RUB 15 bln ahead of schedule. The company sold the two 10-year issues of exchange bonds in March 2016. Metalloinvest used RUB 10 bln of own money and RUB 5 bln from a credit line to redeem the bonds, cutting its net debt by RUB 10 bln. In 2020, the net debt of Metalloinvest shrank by 13.8% to USD 3.237 bln as of the end of the year.

Expobank sets RUB 3 bln bond final guidance at 8% On March , 2021 it was reported that Russia’s Expobank had set the final coupon guidance for RUB 3 bln 3- year exchange bonds at 8%. The initial coupon guidance amounted to 7.75–8%, corresponding to a yield of 7.98–8.24% to a 2-year buyback offer. The technical placement is preliminarily scheduled for March 26. Russian Agricultural Bank, SKB-Bank, and Sovcombank will act as organizers.

Sovcombank agrees to buy stakes in Orient Express Bank On March 25, 2021 it was stated that Russia’s Sovcombank is buying stakes in Orient Express Bank from Baring Vostok, Finvision, and Sherzod Yusupov. The parties expect the deal to be closed within a few weeks after obtaining permits from the central bank and the Federal Antimonopoly Service. The deal is being held on “market conditions,” but its parameters, including the price, is not being disclosed. Sovcombank plans to integrate Orient Express Bank during 12–18 months. Dividends Acron keeps dividend payment guidance at USD 200 mln per year On March 19, 2021 Chairman of the Board of Directors of Russian fertilizer maker Acron Alexander Popov said that the company keeps the dividend guidance of at least USD 200 mln per calendar year In accordance with the interests of its shareholders. Popov added that a recommendation on distribution of the bulk of 2021 dividends will be made close to the end of the year. The company plans to cut 2021 capital expenditures by 16% to USD 210 mln. Three investment projects were finished in 2020, one will continue until April–June, three more started.

Sovcomflot board recommends paying RUB 15.8 bln in 2020 dividends On March 18, 2021 it was stated that the board of directors of Russian shipping company Sovcomflot had recommended paying RUB 15.829 bln in dividends for 2020. The payment will account for 84% of the company’s net profit for 2020, calculated under International Financial Reporting Standards (IFRS). Sovcomflot paid RUB 7.81 bln in dividends for 2019.

X5 board recommends paying RUB 30 bln in 2020 dividends On March 19, 2021 it was stated that the supervisory board of Russian retailer had recommended paying dividends of RUB 30 bln, or RUB 110.49 per share, on 2020 results. With interim dividends paid in December 2020, the payment will amount to RUB 50 bln and account for 176.4% of the company’s net profit for 2020. Core shareholder of X5 Retail Group is CTF Holdings S.A., a part of Alfa- Group, with a 47.86% stake. The company’s free-float is 40.61%.

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Sberbank board recommends paying 56% of IFRS profit in 2020 dividends On March 19, 2021 CEO of Russia’s biggest lender Sberbank German Gref said that the supervisory board of the bank had recommended paying RUB 18.7 per share, or 56% of net profit under International Financial Reporting Standards (IFRS), in dividends for 2020. The total dividend payments will amount to RUB 422.4 bln. The bank’s shareholders will consider the recommendation at an annual general meeting on April 23, while the dividend payment will be made in May. The government holds 52.32% in Sberbank.

Novatek board recommends RUB 23.74 per share in final 2020 dividends On March 19, 2021 it was reported that the board of directors of Russian independent gas producer Novatek had recommended paying RUB 23.74 per share in final dividends for 2020. The shareholders will consider the board’s recommendation at an annual general meeting on April 23. The record date is May 7. Novatek already paid 11.82 rubles per share in dividends for January–June.

Mother and Child board recommends RUB 1.4 bln in 2020 final dividends On March 22, 2021 it was reported that the board of directors of Russia’s Mother and Child maternity hospital and clinic chain, operated by MD Medical Group, had recommended paying RUB 19 per share, or a total of B 1.427 bln, in final dividends for 2020. The company already paid RUB 9.8 per share in dividends for January–June 2020. The shareholders will consider the recommendation at an annual general meeting on April 22. The major shareholder of the group is its founder Mark Kurtser.

En+ Group board to recommend paying no dividends for 2020 On March 25, 2021 it was stated that the board of directors of Russia’s En+ Group plans to recommend paying no dividends for 2020 due to the coronavirus pandemic and will consider paying dividends for 2021 in line with its dividend policy. The final decision will be made in April 2021 before the announcement of the annual general meeting of shareholders.

Eurobonds / DRs

Rusagro CEO Basov buys another 58,000 GDRs On March 22, 2021 it was stated that Russian agricultural holding Rusagro’s CEO Maxim Basov had bought 58,000 global depositary receipts (GDRs) in the company’s head company Ros Agro Plc. As a result of the deal, Basov’s stake in the company currently amounts to 7.54%. He owns a total of 1 mln shares, equivalent to 5 mln GDRs, and 5,142,809 GDRs. Rusagro’s GDRs closed at USD 12.1 per security on the London Stock Exchange on March 19, which means that the stake of 58,000 GDRs could have cost around USD 701,800. The family of holds around 71.9% in Rusagro.

Please be advised that the information presented in this newsletter is based on the following sources: National Settlement Depository (NSD); Clearstream Banking; Euroclear Bank; PRIME-TASS information agency; “Kommersant”, "Rossiyskaya Gazeta”, “Izvestiya, "Vedomosti”, “The Moscow Times“ newspapers, and others.

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