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Presented by: VTB Bank, Custody

November 21, 2019 Issue No. 2019/44

Company News

Delo Group pays deposit in auction for 50% in TransContainer On November 15, 2019 it was announced that Delo Group of Russian businessman Sergei Shishkaryov paid a deposit to participate in Russian Railways’ auction for 50% plus two shares in railway container operator TransContainer. Bids for the auction are collected from August 8 through November 15. The down payment is RUB 3.616 bln. The qualification of bidders is scheduled for November 25, and the auction for November 27. The starting price was set at RUB 36.159 bln. In October, the Federal Antimonopoly Service cleared Delo Group to buy the stake.

Sistema, RCIF to offer 150 mln shares in Detsky Mir SPO on November 18, 2019 On November 15, 2019 it was announced that Russian multi-industry holding Sistema and the –China Investment Fund (RCIF) plan to offer at least 150 mln shares, or about 20.3% in children goods retailer Detsky Mir at a secondary public offering (SPO) to be held from November 18 until November 21. The offering will consist exclusively of existing shares held by Sistema directly and RCIF via its investment vehicles Floette Holdings Limited and Exarzo Holdings Limited. Sistema will retain no more than 36% in Detsky Mir and the RCIF no more than 9.7%.

CEO says Rostec to receive shares of UAC in January–June 2020 On November 18, 2019 Sergei Chemezov, Rostec CEO, said that the transfer of shares of United Aircraft Corporation (UAC) to Russian state industrial corporation Rostec should finish in January–June 2020. The process for transfer of UAC shares will include civil, military, transport divisions and maybe a fourth one, a strategic aviation division. The company may unite it with the transport division, but the question is under discussion now. Rostec will obviously have to do cost cutting, some changes in the organization structure will take place so that companies that used to be part of the corporation will be united in a cluster, i.e the companies that produce component parts, engines, and etc.

Yandex board approves buyback for up to USD 300 mln On November 18, 2019 the board of directors of Russian Internet giant Yandex endorsed a repurchase of up to USD 300 mln shares. Yandex, one of Europe's largest internet companies and the leading search provider in Russia, announces that its board of directors authorized a repurchase of up to USD 300 mln worth of Class A shares of Yandex N.V. Such shares may be repurchased from time to time in open market transactions. The timing and amount of the buyback will depend on market conditions.

DOM.RF supervisory board approves RUB 24 bln issue of new shares On November 19, 2019 the supervisory board of Russian national housing development institution DOM.RF approved RUB 24 bln issue of new shares. The company will place almost 9.623 mln shares in a private offering.

CEO says Russia’s Novotrans may float shares On November 20, 2019 Konstantin Goncharov, CEO of Russian railway rolling stock operator Novotrans, stated that the company did not rule out holding an initial public offering (IPO). The company is constructing RUB 46.5 bln universal terminal in the Port of Ust-Luga with a planned transshipment capacity of 24.3 mln tonnes per year. Goncharov said that the company was not in negotiations to find an investor.

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Gazprom’s unit to sell RUB 210 bln parent company’s shares On November 21, 2019 it was reported that Gazprom Gazoraspredeleinye, a subsidiary of Russian gas giant Gazprom, plans to sell 850.591 mln shares in the parent company worth about RUB 210 bln at the closing price on November 20 on the Exchange, on November 21 through the exchange. The shares, to be sold at a single price, account for a 3.59% stake in the company – the remaining part of a 6.64% quasi- treasury stake the company planned to sell. Gazprom Gazoraspredeleniye will collect bids from 10.00 a.m. through 5.00 p.m. Moscow time. In July, Gazprom’s subsidiaries Gazprom Gerosgaz Holdings BV and Rosingaz Limited, registered in the Netherlands and , respectively, sold 2.93% in the parent company to an undisclosed buyer at RUB 200.5 apiece, or a total of about RUB 139 bln.

Dividends/coupons Magnit board recommends paying RUB 15 bln in January–September 2019 dividends On November 18, 2019 the board of directors of Russian retailer Magnit recommended paying RUB 147.17 per share, or a total of RUB 15 bln, in dividends for January–September. The shareholder register for the dividends is to be closed January 10. Magnit paid RUB 14 bln in dividends for January–September 2018, and RUB 17 bln in dividends for 2018. VTB owns a 17.28% stake in the retailer, Marathon Group an 11.82% one.

Gazprom Neft may pay 50% of IFRS profit in dividends before Gazprom On November 18, 2019 Alexei Yankevich, deputy CEO for economy and finances at Russian oil major , said that the company might start paying 50% of net profit under International Financial Reporting Standards (IFRS) in dividends before its shareholder gas giant Gazprom. In October, Gazprom Neft’s shareholders approved paying RUB 18.14 per share, or 40% of IFRS net profit, in dividends for January–June.

Norilsk Nickel may tie dividend payments to free cash flow On November 18, 2019 Sergei Malyshev, CFO of Russian metals giant Norilsk Nickel, said that the company was considering linking dividends to a free cash flow after the expiration of the shareholder agreement at the end of 2022. The current formula of dividend payments encompassed by the shareholder agreement will be valid until early 2023. Near the expiration date the sides will start discussing the new formula. Malyshev also said that Norilsk Nickel did not rule out entering the foreign debt market in 2020 depending on the market situation.

Executive says Gazprom to consider new dividend policy on December 5, 2019 On November 20, 2019 Alexander Ivannikov, head of the finance department at Russian gas giant Gazprom, stated that the company’s executives would consider a new dividend policy on December 5. Gazprom said it plans to complete work on a new dividend policy until the end of 2019 to start paying dividends under the new policy in 2020. It will envisage payment from the net profit adjusted to non-cash items and an absence of connection of the dividend amount to one for the previous years.

QIWI board approves USD 0.28 per share in dividends for July–September 2019 On November 20, 2019 the board of directors of Russian payment service operator Qiwi approved paying USD 0.28 per share in dividends for July–September. The recommended record date is December 2, and the payment date is December 5. The holders of the American Depositary Receipts (ADRs) will receive the dividends shortly after.

Sovcombank board recommends paying RUB 2.2 bln in dividends On November 21, 2019 the board of directors of Russia’s Sovcombank has recommended paying RUB 2.2 bln from undistributed profit of previous years in dividends on common shares. The record date is January 4, 2020.

Eurobonds / DRs Russian Railways to buy back USD 250 mln Eurobonds of 3 series On November 18, 2019 it was reported that Russian Railways plans to buy back Eurobonds of three series for a total of USD 250 mln in equivalent. Russian Railways plans to buy back U.S. dollar Eurobonds with maturity in 2022 and 2024, and an issue in British pounds maturing in 2031. The 2022-issue bonds will be bought at USD 1,075 per paper. The 2024 issue at USD 1,065 and of the 2031 issue at GBP 1,345 per security. There are USD 960.018 mln of a 2022 bond in circulation, USD 395.901 mln of the 2023 paper and

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GBP 650 mln of the issue maturing in 2031. The company will announce the results no later than November 27.

RusHydro to offer RUB 15 bln Eurobonds at 6.8% On November 18, 2019 a banking source said that Russian hydropower giant RusHydro was offering RUB 15 bln 5-year Eurobonds at a yield of 6.8%. The initial yield guidance amounted to 7–7.15% and was lowered to 6.75–6.85% earlier in the day. The company held a roadshow for the issue in Singapore, London and Frankfurt on November 12–15. Gazprombank, J.P. Morgan, Sberbank CIB and VTB Capital are the organizers.

Russian companies double Eurobond issuance to USD 20 bln in 2019 On November 21, 2019 Andrei Solovyov, head of the fixed-capital market department of VTB Capital, stated on the Russia Calling! investment forum that Russian companies and banks doubled Eurobond issuance to doubled to USD 20 bln in 2019. This year was more active than the previous. Twice as many Eurobonds of Russian issuers were sold. This year as of today, in fact as of the year’s end, it is almost USD 20 bln against USD 10 bln last year. He said that the number of placements also doubled to 33 from 15. Investors are still firstly interested in the issuers from the producing economy, natural resources, infrastructure, oil, gas, chemical products and have less interest in the financial institutes. More securities were placed than redeemed in 2019 with the repayments amounting to USD 14.8 bln. The repayments in 2020 are forecasted at USD 18.2 bln. The share of deals in the euros of the Russian government grew due to the geopolitical situation. Solovyov said that VTB Capital expects more Eurobond placements in rubles in 2020. Several Russian companies are interested in the placement of green bonds after a deal of Russian Railways.

Demand for Alfa-Bank’s Eurobonds exceeds USD 425 mln On November 21, 2019 a banking source said that demand of European and Asian investors for subordinated Eurobonds of Russia’s Alfa-Bank has exceeded USD 425 mln. Earlier in the day, Alfa-Bank started accepting bids for additional subordinated Eurobonds of a U.S. dollar-denominated issue maturing in April 2030. The placement price guidance was set at 100.5%, which corresponds to a 5.84% annual yield. Alfa-Bank and J.P. Morgan are the organizers. In October, the bank placed USD 400 mln subordinated Eurobonds with the coupon rate set at 5.95% and a call option in 5.5 years seeking to replenish its tier-2 capital.

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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