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Presented by: VTB Bank, Custody

September 10, 2020 Issue No. 2020/35

Market News

Antitrust seeks rules of large fin organization deals with firms On September 3, 2020 Andrei Kashevarov, Deputy Director of the Federal Antimonopoly Service, said that the service sees it necessary to elaborate the rules of large financial organizations’ deals with non-financial companies. The rules should include the criteria for admission to the deals and criteria of qualifying them as monopolizing, limiting competition.

Moscow Exchange not to trade US shares September 7 due to holiday On September 4, 2020 it was reported that the Exchange would not trade shares of the U.S. companies on September 7 due to Labor Day. The bourse has thus postponed the start of trading of Apple shares to September 8.

Legislation

Russia, Cyprus sign amendments to double taxation avoidance deal On September 8, 2020 it was reported that Russian Foreign Minister Sergei Lavrov and his Cypriot counterpart Nikos Christodoulides signed a protocol on amendments to a double taxation avoidance deal between the states. In March, Russian President Vladimir Putin suggested imposing a 15% tax on dividend yields withdrawn to accounts in foreign jurisdictions, which needs adjustments to agreements on avoidance of double taxation with other countries. will cancel such agreements unilaterally if a consensus is not reached. Director of the Finance Ministry’s tax and customs policy department Alexei Sazanov said that a preferential tax rate of 5% under the new agreement would be applied to no more than 10% of companies. Sazanov also said that the Finance Ministry was in talks with the Netherlands on amendments to a double taxation avoidance agreement, and expected the state’s answer until the end of September. Russia has not yet sent requests to adjust the taxation agreements with Hong Kong and Switzerland, and they are still discussed by the Russian government.

Company News

Sistema not to continue share buyback in 2020 On September 3, 2020 Vladimir Travkov, Vice President for Finance at Russian multi-industry holding , said that the company did not plan to continue its share buyback program in 2020. Sistema launched RUB 3 bln share buyback program in September 2019 in order to buy back up to 300 mln ordinary shares. In February 2020, the company prolonged the program until the end of the year. As of February 28, Sistema’s unit Sistema Finance bought back 120.6 mln shares of the company worth RUB 1.6 bln.

FESCO board appoints Korostelyov as new CEO On September 4, 2020 it was stated that the board of directors of Russia’s Far-Eastern Shipping Company’s (FESCO) early terminated powers of CEO Maxim Sakharov and appointed Arkady Korostelyov as the new CEO. Korostelyov is expected to hold the post until September 3, 2025. Sakharov will become his first deputy.

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Sistema says sells entire 20.38% stake in On September 4, 2020 it was announced that Russian multi-industry holding Sistema sold its entire 20.38% stake in children goods retailer Detsky Mir. On September 2 Sistema and the Russia–China Investment Fund (RCIF) launched a planned sale of all their shares in Detsky Mir at RUB 112 per share. The deal will allow Detsky Mir to become the first Russian company with 100% shares in free float.

Deputy PM Grigorenko to head VEB.RF supervisory board On September 4, 2020 it was reported that Deputy Prime Minister Dmitry Grigorenko would head the supervisory board of VEB.RF. A source stated that in August that Grigorenko would replace Prime Minister Mikhail Mishustin on the post.

Polyus can pay RUB 240 per share in final dividends for January–June 2020 On September 7, 2020 the board of directors of Russian gold producer recommended paying RUB 240.18 per share in dividends for January–June 2020. The record date is October 20. Polyus paid RUB 162.98 per share for January–June 2019 dividends and RUB 244.75 per share in final dividends. Tycoon Said Kerimov is the core shareholder of Polyus.

Globaltruck unit buys back 22,200 shares in parent firm in August 2020 On September 7, 2020 it was stated that Globaltruck Logistic, a subsidiary of Russian cargo carrier Globaltruck, bought back 22,200 shares in the parent company in August, which amounts to 0.04% of the parent company’s shareholder equity. RUB 386 mln buyback program has been in force since November 11, 2019 and will last until May 31, 2021 or until the limit is reached in price or the amount of shares. Under the program, the company buys its shares at no more than RUB 132 per security. The unit bought back a 0.33% stake in the parent company in November 2019, a 0.34% stake in December 2019, a 0.13% stake in January 2020, a 0.47% stake in February, a 0.24% stake in March, a 0.09% stake in May, a 0.22% stake in June and a 0.16% one in July.

EuroChem Group appoints Rashevsky as new CEO On September 7, 2020 it was announced that Russian fertilizer producer EuroChem Group appointed Vladimir Rashevsky, former CEO of Siberian Coal Energy Company (SUEK), as its new CEO. Rashevsky will replace Petter Ostbo at the post.

Rosneft says buys back USD 11.4 mln of securities August 31 – September 4, 2020 On September 8, 2020 it was reported that Russian oil major bought back 2.342 mln shares and global depositary receipts (GDRs) for USD 11.4 mln on August 31–September 4. The company bought 1.319 mln common shares and 1.23 mln GDRs. The weighted average price stood at USD 4.89 apiece. Since the launch of USD 2 bln buyback program on March 23, the company bought back 47.497 mln securities for USD 209 mln.

Otkritie sells Polymetal stake at RUB 1,900 per share On September 9, 2020 it was stated that Otkritie Financial Corporation (FC) Bank sold 16 mln shares of gold producer Polymetal, or an about 3.4% stake, for RUB 1,900 per share. Citi, JPMorgan and UBS are the organizers of the deal. The bank sold 15.2 mln shares of Polymetal for RUB 1,392 per security in July, reducing the stake in the company to 3.89% from 6.89%. Polymetal shares fell by 4.4% to RUB 1,862.5 as of 10:31 a.m., Moscow time.

MTS buys back 0.021% of capital under repurchase plan On September 10, 2020 it was reported that Bastion, a wholly-owned subsidiary of major Russian mobile operator MTS, acquired 427,096 MTS shares, representing 0.021% of the operator’s share capital. The shares were acquired under a repurchase plan announced on March 31, and since then Bastion has acquired 20.064 mln MTS ordinary shares, including 8.223 mln shares bought back from the operator’s main owner, multi-industry holding Sistema for RUB 2.715 bln. In total, the purchased shares account for 1.006% of the capital. Under the Russian law, MTS must disclose any shares acquired by the company or by any of its subsidiaries.

Dividends/coupons Gazprombank shareholders approve RUB 9 bln of dividends for 2019 On September 3, 2020 shareholders of Russia’s Gazprombank approved a decision to pay RUB 15.36 per ordinary share, or a total of RUB 8.999 bln, in final dividends for 2019. No dividends on preferred shares of type A and type B were earmarked. The record date for the dividends is September 14. Gas giant

2 owns 29.764% in Gazprombank, while Gazprom Capital has a 20.1133% stake, private pension fund GAZFOND holds 41.576%, state development corporation VEB.RF has 8.5341%, the bank’s management owns 0.0123%, and LLC Lider has 0.0003%. The Finance Ministry holds 100% of type A preferred shares and the Deposit Insurance Agency holds 100% of type B preferred shares.

En+ Group directors recommend zero dividends for 2019 On September 3, 2020 the board of directors of Russian multi-industry holding En+ Group recommended paying zero dividends for 2019. The board recommended leaving the net profit for the year undisbursed. The company did not pay dividends for 2018 as well due to extraordinary challenges.

Transmashholding board recommends leaving 2019 profit undistributed On September 4, 2020 the board of directors of Russian railway equipment producer Transmashholding recommended leaving the 2019 net profit undistributed until adoption of relevant recommendations. In 2019, the company’s net profit rose 1.5% to RUB 5.514 bln under Russian Accounting Standards (RAS) and increased 42% to RUB 24.3 bln under International Financial Reporting Standards (IFRS). France’s Alstom holds 20% in Transmashholding, while companies of Iskander Makhmudov, Andrei Bokarev, Dmitry Komissarov, and Kirill Lipa own around 80%.

Europlan says to pay RUB 1.8 bln in dividends for January–June 2020 On September 4, 2020 shareholders of Russian car leasing company Europlan approved paying RUB 15 per share, or a total of RUB 1.8 bln, in dividends for January–June. The company will pay RUB 1.703 bln from the net profit for January–June and RUB 96.9 mln from the undisbursed profit for 2019. Safmar Financial Investments owns 100% in Europlan.

Mother and Child says owners vote for RUB 18.5 per share in 2019 dividends On September 4, 2020 shareholders of Russia’s Mother and Child maternity hospital and clinic chain, operated by MD Medical Group, approved paying RUB 1.39 bln, or RUB 18.5 per share, in dividends for 2019. The record date is scheduled for September 16. In March, the company’s board of directors recommended paying RUB 8.5 per share, or a total of RUB 639 mln, in dividends for 2019 but in April, the shareholders decided against dividend payment. At the end of August, the company decided to reconsider the issue.

RusHydro board offers to pay RUB 0.0357 per share in 2019 dividends On September 8, 2020 the board of directors of Russian state-controlled hydropower giant RusHydro recommended paying RUB 0.03568039 per share in dividends for 2019. The shareholders will decide on the issue at an annual general meeting scheduled for September 30. The company said in August that it kept the plan to pay dividends for 2019 at the amount at least equaling the average for three previous years, which is RUB 0.362 per share.

Sibur owners approve paying RUB 12.5 bln in January–June 2020 dividends On September 8, 2020 shareholders of Russian petrochemical holding Sibur approved paying RUB 12.483 bln, or RUB 5.73 per common share, in dividends for January–June. The record date is September 14. , co-owner of independent gas producer , has 48.5% in Sibur, tycoon has 17%, acting and former top managers of the company own 14.5% in total, while China’s Sinopec and the Silk Road Fund own 10% each.

Dorogobuzh board recommends paying RUB 5.69 bln in dividends On September 10, 2020 the board of directors of Russian mineral fertilizer producer Dorogobuzh, part of Vyacheslav Kantor’s Acron group, recommended paying RUB 6.5 per share, or RUB 5.69 bln, in dividends using undistributed profit of previous years. The shareholders will consider the recommendation at an extraordinary general meeting on October 2. The record date is October 20.

Eurobonds / DRs Demand for Eurobonds exceeds USD 2 bln On September 4, 2020 Andrei Solovyov, head of the debt capital market department of VTB Capital, said that demand for Russian metals giant Norilsk Nickel’s USD 500 mln 5-year Eurobonds exceeded USD 2 bln. The yield guidance for the Eurobonds amounted to around 2.875% initially and was lowered to the final level of 2.55%. Citi, Societe Generale, UBS, BofA Securities, Gazprombank, Sberbank CIB, , and VTB Capital acted as organizers.

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VEON places RUB 10 bln 5-year Eurobonds under 6.5% On September 4, 2020 it was reported that Amsterdam-based VEON, the sole owner of Russian mobile operator VimpelCom, placed RUB 10 bln 5-year Eurobonds with an annual yield of 6.5%. VEON accepted bids for the bonds maturing in September 2025 on September 3. The yield guidance was set at 6.5–6.7%. Andrei Solovyov, head of debt capital markets at VTB Capital, said investors’ demand reached RUB 17.5 bln. Russian investors bought 70% of the issue, while Asian investors got 20%, U.K. investors had 9%, and European investors got 1%. VEON’s unit, VEON Holdings issues the securities. VEON will spend the raised money on corporate purposes. In addition to VTB Capital, the co-organizers are Citi and Sberbank CIB.

Sovcombank to issue 3-year ruble-denominated Eurobonds On September 9, 2020 a banking source stated that Russia’s Sovcombank plans to offer 3-year ruble- denominated Eurobonds. On September 8 the bank will hold several conference calls with investors to discuss the offering. Citi, HSBC, ING and Sovcombank will act as organizers.

IMH may offer 5-year US dollar Eurobonds On September 8, 2020 a banking source said that Russian coal and iron ore maker Industrial Metallurgical Holding (IMH) planned to offer 5-year U.S. dollar-denominated Eurobonds. On September 9, the company will hold a global conference call with investors to discuss a possible offering, it will also hold a number of individual calls. Citi, Renaissance Capital, Alfa-Bank, Gazprombank, Sberbank CIB and VTB Capital are the organizers.

Borets sets USD 300 mln Eurobond guidance at 6.25% On September 10, 2020 a financial source said that Russian oil service equipment producer Borets has set the yield guidance for 6-year USD 300 mln Eurobonds at 6.25% annually. Demand exceeds USD 425 mln. , Sberbank CIB, and Raiffeisen Bank International are the organizers. The company also plans to buy back USD 330 mln worth of 2022 Eurobonds.

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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