Russia 111130 Basic Political Developments

VTB Capital Said to Hire Credit Suisse Bankers for MENA Equities

http://www.bloomberg.com/news/2011-11-30/vtb-capital-said-to-hire-credit-suisse-bankers-for-mena-equities.html
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By Zahra Hankir and Jason Corcoran - Nov 30, 2011 6:28 AM GMT+0100

VTB Capital Plc, the investment banking unit of Russia’s second-largest lender, may hire four Credit Suisse Group AG (CSGN) bankers based in Dubai to form an equities team in the Middle East and North Africa, two people familiar with the matter said.

Karim Nsouli, head of MENA sales trading at Credit Suisse, may lead the unit, one of the people said, declining to be identified because the matter hasn’t been made public. Ali Salaam, co-head of MENA equities at Credit Suisse, may also join VTB Capital in Dubai, the person said.

A spokesman for VTB Capital in Moscow, who didn’t want to be identified citing company policy, declined to comment. A spokeswoman at Credit Suisse in Dubai couldn’t immediately be reached for comment.

To contact the reporters on this story: Zahra Hankir in Dubai at [e-mail]; Jason Corcoran in Moscow at [e-mail]

To contact the editor responsible for this story: Claudia Maedler at [e-mail]

Raiffeisen Russia’s Monin Says Funds at Parent May Rise: Voices

http://www.bloomberg.com/news/2011-11-29/raiffeisen-russia-s-monin-says-funds-at-parent-may-rise-voices.html
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By Agnes Lovasz and Maria Ermakova - Nov 29, 2011 7:12 PM GMT+0100

Sergey Monin, chief executive of Moscow-based ZAO Raiffeisenbank, comments on his bank providing liquidity to its parent, Austria’s Raiffeisen AG, and government plans to allow foreigners to trade Russian state bonds.

He spoke today in an interview at a Russian banking conference in London.

On Raiffeisen’s Russian unit’s lending to its parent:

“Our deposits with the parent company have increased. But that’s pure liquidity management where we chose between the ruble interest rate and deposits on the local market and the interest rates implied by swap operations. It is more profitable to place free liquidity through FX swaps and then deposit it to the parent bank.

“It will increase in case the ruble appreciates further. In this case the share of foreign currency deposits will grow.”

He said he’s unaware of any reprimand by Russia’s central bank in reaction to these transactions.

On Russia opening its OFZ government bond market to foreigners:

“There is no major participation of foreign investors in the bond market in general. The share of foreign investors is minor. The opening of the OFZ market -- I don’t really see it will significantly increase foreign investor demand. When the ruble becomes a serious foreign-exchange investment, the OFZ may become an instrument that foreign investors will use.”

To contact the reporters on this story: Agnes Lovasz in London at [e-mail]; Maria Ermakova in London at [e-mail]

To contact the editors responsible for this story: Balazs Penz at [e-mail]; Colin Keatinge at [e-mail]

Rostelecom reiterates London listing plans

http://www.rbcnews.com/free/20111130120011.shtml

      RBC, 30.11.2011, Moscow 12:00:11.State-controlled telecommunications operator Rostelecom has confirmed its intention to hold a listing on the London Stock Exchange in December 2011, the company's CEO Alexander Provotorov told reporters.

      "We are planning to enter the stock exchange before the end of the year, but final approvals are still pending," he said, adding that the operator could float its stake in 2012, without elaborating on its size.

      According to RBC's sources, the operator is expected to seek a London listing in the second half of December.

Severstal to spin off gold producing unit

http://www.rbcnews.com/free/20111130120350.shtml

      RBC, 30.11.2011, London 12:03:50.Severstal intends to spin off its gold producing subsidiary Nord Gold by the end of January 2012, the Russian steelmaker announced today.

      Severstal is expected to swap 100 of its own shares or global depositary receipts (GDRs) for 186 shares or GDRs of Nord Gold.

UPDATE 2-Severstal to spin off gold unit, eyes IPO

http://www.reuters.com/article/2011/11/30/severstal-nordgold-idUSL5E7MU0N620111130
4:05am EST

* Russia's largest steelmaker to split Nord Gold

* Could list Nord Gold global depositary receipts in London

* Follows postponed $1.5 billion IPO in February

* Nord Gold set up in 2007

By Megan Davies and Polina Devitt

MOSCOW, Nov 30 (Reuters) - Russian steelmaker Severstal is set to spin off its Nord Gold unit and could list the standalone business in London, it said on Wednesday, less than a year after it was forced to pull a planned $1.5 billion public offering.

Severstal, which aims to complete the separation by late January 2012, said the swap and potential listing of global depositary receipts would allow Nord Gold and Severstal to focus on their core areas of activity, raise the profile of the gold unit and allow it direct access to funding.

Severstal had planned to float the gold unit earlier this year, using cash raised to pay off debt owed to the parent company and to fund further growth. It cancelled the offering in February, blaming poor market conditions that meant it felt investors would be underpaying for Nord Gold assets.

Nord Gold was set up in 2007 and has since spent more than $1 billion buying mines in West Africa and Kazakhstan, building a group with expected 2011 output of up to 840,000 ounces, rivalling Randgold and Russian peer Polymetal .

Under the deal, Severstal investors will be able to swap their paper for shares in Nord Gold currently held by a Severstal subsidiary. If Severstal shareholders take up the offer and more than 5 percent of the gold unit's share capital ends up in the hands of minority investors, Nord Gold will apply to list global depositary receipts in London.

Any shares not acquired by minority investors will be bought up by Rayglow, owned by Severstal's controlling shareholder, Alexei Mordashov.

Severstal shares were down 2.8 percent at 432.6 roubles at 0850 GMT, with the European basic resources sector down 2.2 percent.

Alexei Kulichenko, chief financial officier of Severstal, said on Wednesday that if conditions for the listing were not met immediately, it could still happen at a later date.

"It will be of course done in due course, in accordance with Nord Gold's strategy, which can be discussed with them separately," he told reporters on a conference call.

Severstal said the exchange would see 100 Severstal shares swapped for 186 Nordgold shares, after a planned two-for-one reverse stock split of Nordgold shares.

Kulichenko said Nord Gold debt to Severstal would be repaid, but there was no other cash component of the split, as the Russian steelmaker was no longer fretting over leverage.

"We see much stronger performance of Severstal to date, so we feel comforable and we don't see the urgent need of the deleveraging," he said.

Nord Gold for its part has signalled it would continue monitoring acquisition opportunities even without a London listing.

It has said it is pressing ahead with $300 million of capital expenditure this year including $130 million on exploration, and is continuing to eye opportunities, principally assets of a similar size to its two main exploration projects -- Bissa in Burkina Faso and Gross in Russia -- meaning projects with a potential resource base of 2 million to 6 million ounces.

Severstal: Spin-off of gold assets in the offing

http://www.bne.eu/dispatch_text18068

UralSib
November 30, 2011

BoD to consider spin-off of NordGold. Kommersant reported that SeverstalÕs (SVST LI Ð Buy) BoD will consider spinning off the com- panyÕs gold assets into a separate company at the next board meet- ing on 6 December. The spin-off will then be submitted for approval at the EGM; shareholders who vote against the spin-off will be able to sell Severstal shares to the company in the buy-back. We view the news as very positive development for the stock.

NordGold Ð RussiaÕs 3rd largest gold producer. Nord Gold is RussiaÕs third-largest gold producer and is expected to produce 800 koz of gold in 2011. We expect that NordGold will generate EBITDA of about $550 mln, or 15% of SeverstalÕs 2011E EBITDA. Severstal failed to place NordGold shares on the LSE in 1Q11 and the spin-off of the gold assets is the most likely sce- nario for NordGold.

Value-accretive for Severstal minorities. The spin-off of NordGold assets will be a positive catalyst for the stock in the short term, as SeverstalÕs shareholders may get shares in Nord Gold for free after the spin-off of the gold division from the company. This could unlock additional value of around $1-$1.5 bln, or 8-12% of SeverstalÕs current market capitalization thanks to the premium included in the valuation of gold companies. Moreover, the price of the buy-back will be set at around the six-month average trailing price on MICEX of RUB451/share (at a premium of 1% to yesterdayÕs closing price of RUB445/share), which should set the floor for the market share price, supporting the stock. We reiterate our positive view on the company.