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Presented by: VTB Bank, Custody

August 5, 2021 Issue No. 2021/29

Market News

Moscow Exchange to allow trade in all U.S. S&P 500 shares On July 29, 2021 Director of the Shares Market Department of The Exchange Boris Blokhin stated that the bourse plans to extend the number of traded foreign stocks to over 1,000 in 2022, including all the securities of the U.S. S&P 500 index. Blokhin said that they are aggressive enough in their plans to add foreign securities. There are 173 foreign shares and depositary receipts now, and it is planned to add 30 new soon. From September, it is expected to expand access to foreign stocks significantly to reach the figure of over 500 until the end of the year, and to over 1,000 in 2022. Blokhin added that currently the exchane focuses on the U.S. stocks, and will allow trade of the entire list of the S&P 500 index with 505 shares. Later they will explore several other jurisdictions, first of all, Europe and Asia. Blokhin also said that trading in foreign stocks already accounts for 4% of the bourse’s stock market turnover.

Central bank sells RUB 4.4 bln of coupon bonds out of RUB 120 bln offer On August 3, 2021 it was disclosed that ’s central bank had sold RUB 4.394 bln of coupon bonds during the day out of a RUB 120.241 bln limit. Demand totaled RUB 4.409 bln. The cut-off price amounted to 100% of a face value and the weighted average to 100.0001%. The settlement date was August 4.

Finance Ministry places RUB 75.278 bln OFZ bonds On August 4, 2021 it was stated that Russia’s Finance Ministry had placed RUB 75.278 bln of OFZ government bonds at two auctions during the day. At the first auction, the ministry placed RUB 55.429 bln of OFZ 26239 government bonds with a fixed coupon maturing in July 2031. The cut-off price amounted to 99.2515% and the weighted average price to 99.4652%. The cut-off yield amounted to 7.12% and the weighted average yield stood at 7.09%. Demand totaled RUB 103.332 bln. At the second auction, the ministry placed RUB 19.849 bln of OFZ 26238 bonds with a fixed coupon maturing in May 2041. The cut-off price amounted to 99.0877% and the weighted average price stood at 99.3499%. The cut-off yield amounted to 7.31% and the weighted average yield amounted to 7.29%. Demand totaled RUB 41.703 bln.

Amount of private investors on rises by 446,000 in July On August 4, 2021 it was stated that the amount of individuals with broker accounts on the Moscow Exchange had grew by 446,000 people in July to 13.2 mln people, and about 1.9 mln of them conducted deals in the month. Private investors invested RUB 34 bln into Russian shares on the Moscow Exchange, RUB 43 bln into bonds, and RUB 8.3 bln into exchange unit investment funds and ETF funds. Corporate bonds accounted for 83.3% of investment in the sector, while state bonds accounted for 11.2% and Eurobonds for 5.5%. The share of private investors in the stock trade stood at 36.3%, in the bond market at 15.2%, in the futures market at 42.6%, and on the foreign currency spot market at 12.1%, the bourse said.

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Company News

Sistema acquires Russian helicopter company AltaiAvia On July 29, 2021 it was stated that Sistema Telecom Assets, a subsidiary of Russian multi-industry holding Sistema, had acquired 100% in helicopter company AltaiAvia that provides air transportation services in the republic of Altai. The details of the deal were not provided. AltaiAvia owns 11 helicopters and the infrastructure, including an airfield for light aircraft, a hangar for parking and servicing of aircraft, a landing pad for small helicopters, and a hotel for personnel. The company is in close proximity to the touristic routes of the Altai Mountains and other assets of Sistema – the airport of Gorno-Altaisk and eco-hotel Cosmos Collection Altay Resort. The acquisition of AltaiAvia, the only airline in the Altai Mountains with its own fleet and on-land infrastructure, will allow Sistema to enter the promising market of small aviation, and meets its strategy for development of the aviation and touristic cluster in the region.

M.Video to offer RUB 5 bln exchange bonds On August 2, 2021 it was reported that Russian electronics retailer M.Video plans to accept bids for at least RUB 5 bln of 3-year exchange bonds on August 6. The yield guidance amounts to no more than 175 basis points to 3-year government OFZ bonds. The issue carries quarterly coupons. Technical placement is scheduled for the week starting August 9. Alfa-Bank, Gazprombank, Credit Bank of Moscow, Russian Agricultural Bank, SberCIB and Sovcombank are the organizers.

Antitrust allows Mosenergo to buy 100% in Rusenergosbyt On August 2, 2021 it was stated that the Federal Antimonopoly Service had approved a request of power utility Mosenergo, a unit of Gazprom Energoholding, to buy 100% in Rusenergosbyt, the main power supplier of Russian Railways, under some conditions. Under the deal, Mosenergo now has to provide accurate and high-quality plans of purchases of power on the wholesale market, and to report to the antimonopoly watchdog on a quarterly basis. The condition was set as Mosenergo produces power for the wholesale market, while Rusenergosbyt buys and sells power. The conditions also stipulate that Mosenergo’s plans should not differ greatly from the figures defined by the conditions. The measure should allow the companies to avoid an increase of prices on the wholesale market due to higher demand that is not backed by physical power consumption. The plans should be based on hourly consumption calculated on the results of the competitive outtake of daily pricing bids in the European part of Russia and in the Urals Federal District.

Russian Agricultural Bank sets 1st coupon of USD 100 mln bond at 1.4% On August 2, 2021 it was stated that Russian Agricultural Bank had set the first coupon’s rate for USD 100 mln 3-year exchange bond at 1.4% annually. The issue carries monthly coupons. The technical placement took place on August 3.

VimpelCom to hold EGM to elect new board of directors on September 30 On August 2, 2021 it was stated that the board of directors of Russian mobile operator VimpelCom, working as Beeline, had decided to hold an extraordinary general meeting (EGM) of shareholders on September 30 to elect a new membership of the board. The shareholder register for the meeting will close on August 10. Completed voting ballots will be accepted by post through September 28. A list of the candidates to be elected to the board of directors has a new name of Michael Schulz, group chief people officer at VEON, VimpelCom’s sole owner.

Lenta closes purchase of Billa supermarkets for EUR 225 mln On August 3, 2021 it was stated that retailer Lenta had closed an acquisition of Russian supermarkets Billa for about EUR 225 mln. The price reflects some adjustments at the moment of finishing the transaction related to the cash, debt and working capital of Billa Russia. Lenta earlier set the deal at EUR 215 mln. The combined shopping space of 161 Billa supermarkets amounts to 138,051 square meters with the bulk of them in Moscow and the Moscow Region. Lenta plans to integrate Billa’s supermarkets and employees in 12 months, while the Billa brand will cease to exist following the integration. After the deal, Lenta will become the second largest retailer in Moscow and the Moscow Region by the number of stores.

G-Group to accept bids for RUB 3 bln 3-year bond on August 11 On August 3, 2021 it was reported that Russia’s Tatarstan republic-based real estate developer G-Group plans to accept bids for RUB 3 bln of 3-year exchange bonds on August 11. The first coupon guidance is set at below 11.5%, which corresponds to a yield of 12.01% annually. The issue will carry quarterly coupons and amortization in parts. The technical placement date will be announced later. Alfa-Bank, Otkritie Financial Corporation (FC) Bank, Sovcombank, BCS Global Markets, ITI Capital and Septem Capital are the organizers.

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Central bank starts taking bids for Otkritie Bank sale On August 3, 2021 it was stated that the central bank had started taking bids from strategic investors for an organized auction for Otkritie Financial Corporation (FC) Bank. It was also mentioned that at the same time, the Bank of Russia was considering an alternative way of selling the bank’s shares to a strategic investor, this is why the Bank of Russia starts studying interest of potential investors in acquisition of the bank’s shares. Bids collection is to understand the interest, depending on which the authority may spin off Otkritie FC Bank’s insurance business or its pension business before the sale. The way of the sale will be defined after analysis of the bids, the authority said. According to the materials of the regulator, it may sell at least 50% plus one share in Otkritie FC Bank, and if interest is high, the auction may happen until the end of 2021. The central bank may sell the stake to a strategic investor, or in parts through different procedures. A spokesperson for the regulator said that Otkritie FC Bank was an attractive asset, and that the central bank was still considering an initial public offering (IPO) as the main option for selling its shares. The sale to a strategic investor can be done in different ways. The central bank may sell the large stake in small portions in several stages. The results of the first stage will allow the regulator to be more certain about the terms and form of the deal. But the regulator declined to disclose information on the price or other conditions of the possible deals. Otkritie FC Bank was the first large bank to be bailed out through the central bank’s fund for consolidation of the banking sector. Otkritie CEO Mikhail Zadornov said previously that the regulator may sell an around 20–25% stake in the bank during the first privatization stage.

Otkritie FC Bank starts collecting bids for shares in Rosgosstrakh On August 3, 2021 it was stated that Russia’s Otkritie Financial Corporation (FC) Bank had started collecting bids from investors that are willing to buy shares in insurer Rosgosstrakh in the framework of studying interest of potential strategic investors. Following the analysis of bids, the bank will make a decision on further steps regarding sales of the insurance company. Earlier in the day, the central bank started collecting bids from investors that want to participate in a sale of shares in Otkritie FC Bank.

Ag Bank cuts bond guidance to 7.6–7.7% On August 3, 2021 it was reported that Russian Agricultural Bank had cut the coupon guidance for RUB 10 bln of 3-year exchange bonds to 7.6–7.7%. The guidance corresponds to a 7.74–7.85% annual yield to maturity. The issue will carry semiannual coupons. Technical placement is preliminarily scheduled for August 5. Gazprombank, brokerage company Region, Russian Agricultural Bank and Sberbank CIB will act as the organizers.

RusGazDobycha may float shares after launching Ust-Luga facility On August 3, 2021 CEO of Russian gas producer RusGazDobycha Konstantin Makhov told reporters that the company is considering holding an initial public offering (IPO) after the launch of a gas chemical facility in Ust-Luga in 2025. The joint project of RusGazDobycha and gas giant Gazprom in Ust-Luga includes constructing a plant to process 45 bln cubic meters of gas per year, as well as to produce 13 mln tonnes of liquefied natural gas (LNG), up to 4 mln tonnes of ethane, and more than 2.2 mln tonnes of liquefied hydrocarbon gases. Investments in the project are estimated at RUB 3 trln, Makhov said, adding that about half of the sum will be spent on gas processing and LNG capacities and the other half on gas chemical facilities. The project might receive money from the National Wealth Fund if the government sees such a large investment reasonable and possible, he added. RusGazDobycha and Gazprom are yet to choose a technology for gas liquefaction of gas at the plant, Makhov said. Makhov also said that RusGasAlyans, a joint venture of the two companies, will launch the first stage of the Semakovskoye field in July–September 2022. RusGasAlyans CEO Andrei Frolov said that the project’s maximum production capacity of 14.2 bln cubic meters of gas per year will be reached in 2027. Makhov also said that the Federal Antimonopoly Service approved transferring Gazprom Neftekhim Salavat to RusGazDobycha. A preliminary agreement with Gazprom has already been signed on delivery of additional 28 bln cubic meters of ethane-bearing gas to Gazprom Neftekhim Salavat.

Shareholders of DeloPorts distribute RUB 2.7 bln H1 net profit On August 3, 2021 it was stated that the shareholders of Russian stevedore company DeloPorts distributed RUB 2.7 bln of the net profit for January–June 2021 at an extraordinary general meeting. The net profit of the company more than doubled to RUB 3.1 bln in the period, as calculated under Russian Accounting Standards (RAS). Key shareholder Sergei Shishkaryov will get RUB 270,000.

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Skillbox buys 30% in e-school KESPA fully valued at RUB 100 mln On June 4, 2021 it was reported that Platform Skillbox, a part of the educational division of Russian Internet company Mail.ru Group, had acquired 30% in online English school KESPA, which is valued by a source close to the company at RUB 100 mln, and an option to acquire additional shares. Under the deal, Skillbox will also get an opportunity of consolidation and management of school KESPA. KESPA is a resident of the IT cluster of the Skolkovo Foundation.

Center IDGC, Center & Volga Region IDGC change names On August 4, 2021 it was stated that Russia’s Center Interregional Grid Distribution Company (IDGC) and Center and Volga Region IDGC, units of state power grid holding Rosseti, had changed their legal names into Rosseti Center and Rosseti Center and Volga Region, respectively. Rosseti decided to switch the group’s brand architecture in June 2019. So far, eight subsidiaries of the company have changed names into Rosseti Moscow Region, Rosseti Lenenergo, Rosseti Siberia, Rosseti Volga, Rosseti Kuban, Rosseti Tyumen, Rosseti Yug, and Rosseti North Caucasus. Changes in names do not lead to any changes in rights or liabilities, Rosseti said.

Samolet Group to offer RUB 10 bln of bonds in August On August 5, 2021 it was stated that Russian developer Samolet Group plans to accept bids for RUB 10 bln of 3-year exchange bonds in the second half of August. The coupon guidance will be announced later. The issue carries quarterly coupons. Alfa-Bank, VTB Capital, Gazprombank, Credit Bank of Moscow and Sovcombank are the organizers.

Transfin-M to collect bids for RUB 5.5 bln bonds in August On August 5, 2021 it was reported that Russian leasing company TransFin-M plans to accept bids for RUB 5.5 bln of 10-year exchange bonds in the second half of August. The price guidance will be announced later. The issue will carry quarterly coupons and a 3-year buyback offer. Promsvyazbank, Credit Bank of Moscow, Sinara Investment Bank, Sovcombank and Novikombank are the organizers.

Evraz not to attract investors to coal assets after spin-off On August 5, 2021 President of U.K.-based mining giant Evraz, which operates mainly in Russia, Alexander Frolov told reporters that Evraz does not plan to attract investors to the coal assets consolidated on the basis of Raspadskaya, and which the company plans to spin off. The spin-off is planned to happen until the end of the year. As a result, the current Evraz shareholders will get a chance to own shares in Raspadskaya directly. Frolov owns a 9.65% stake in Evraz, and plans to remain a shareholder of Raspadskaya as well. Evraz Vice President for Finance Nikolai Ivanov told reporters that the company might maintain the ratio of net debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) at 1x until the end of the year. He said that they don’t plan any debt payments until the end of this year, and are only preparing to refinance the Eurobonds which are to be redeemed in January 2022. The management of Evraz see no significant problem with that as cash on accounts of the company exceeds USD 1.4 bln. Ivanov added that they are studying different options for refinancing. The Eurobonds and banking funds are all available. Frolov also said the launch of a new vanadium plant approved by the board of directors will not have any noticeable impact on Evraz’ capital expenditures. Total investment in the plant until 2025 was estimated at around USD 228 mln, while the company’s annual capital expenditures for the next three years are planned at USD 1 bln.

Sberbank places RUB 32 bln of bonds of 2 issues On August 5, 2021 it was reported that Russia's biggest lender Sberbank had placed bonds of two issues totaling RUB 32 bln. The bank accepted bids for the 2-year exchange bonds with semiannual coupons from August 3 to August 5, and the 5-year exchange bonds with semiannual coupons on August 5. The limit on each issue initially amounted to at least RUB 15 bln. The 2-year issue limit was set at RUB 28 bln and the 5- year one at RUB 4 bln. The final coupon guidance for the 2-year issue amounted to 7.3% annually, which corresponds to a 7.43% yield to maturity. For the 5-year issue it amounted to 7.43% annually, which corresponded to a 7.57% yield. Technical placement is preliminarily scheduled for August 6. Brokerage company Region, SberCIB, and Sovcombank act as the organizers of the placement.

Dividends VTB Bank still plans to pay 50% of IFRS net profit in 2021 dividends On July 30, 2021 a member of the executive board of Russia’s second largest bank VTB Dmitry Pyanov said in a conference call that the management of the bank would recommend the dividend payout for 2021 at 50% of the net profit calculated under International Financial Reporting Standards (IFRS). VTB Bank expects its net profit to amount to RUB 295 bln in 2021. The Federal State Property Management Agency, the Finance Ministry, and the Deposit Insurance Agency control 92.23% of the shareholder equity of VTB Bank.

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MTS may pay RUB 10.55 per share in dividends for January–June On July 30, 2021 it was stated that the board of directors of Russian mobile operator MTS had recommended paying RUB 10.55 per ordinary share or RUB 21.1 per American depositary receipt (ADR) in dividends for January–June. The combined payout may reach RUB 21.08 bln. The shareholders will consider the recommendation at an extraordinary general meeting (EGM) on September 30. The record date for the dividends is October 12. MTS paid RUB 8.93 per share, or RUB 17.8 bln in total, for January–June 2020, and RUB 26.51 per share or RUB 52.97 bln in total for 2020.

TMK may pay RUB 17.71 per share in dividends for January–June On July 30, 2021 it was stated that the board of directors of Russian oil and gas pipe producer TMK had recommended paying RUB 17.71 per share, or a total of RUB 18.296 bln, in dividends for January–June. The dividend policy of TMK encompasses payment of at least 25% of the consolidated net profit calculated under International Financial Reporting Standards (IFRS) in dividends. The company previously paid RUB 3 per share in dividends for January–June 2020, and RUB 9.67 per share in dividends for 2020. Dmitry Pumpyansky, chairman of the board of directors of TMK, is the core shareholder of the company.

Evraz board suggests paying USD 802.3 mln in interim dividends On August 5, 2021 it was stated that the board of directors of U.K.-based mining giant Evraz, which operates mainly in Russia, had approved paying USD 0.55 per share, or a total of USD 802.3 mln, in interim dividends. Earlier in 2021, the company paid USD 0.2 per share, or a total of USD 291.7 mln in interim dividends. Roman Abramovich has a 28.64% interest in Evraz, Alexander Abramov 19.32%, Alexander Frolov 9.65%.

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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