Sberbank and Rostelecom have signed an agreement on a parity basis on increasing the capital of the Telecom 5 commercial real estate sub-fund joint venture (JV) to 8.8 billion roubles. The transaction was organised with the participation of Sberbank Investments LLC (a 100% subsidiary of Sberbank). Sberbank and Rostelecom will make an additional contribution of 2.4 bln roubles each to the JV, maintaining 50% stake each in the company.
The goal of the capital increase is to purchase 22 additional real estate properties with a total area of 139,000 square meters in Moscow, the Moscow Region, and Saint Petersburg from Rostelecom in order to realise the investment and development potential of the properties to the fullest possible extent. The portfolio managed by the JV has been increased to 38 properties in 11 Russian cities. The total area of the properties owned by the JV now exceeds 239,000 square meters. These properties previously belonged to Rostelecom.
Sberbank and Rostelecom established the JV on the basis of the first 16 properties in December 2016. The parties have signed a letter of intent with LEGENDA Intelligent Development on the implementation of a development project at one of the properties in Saint Petersburg. In addition, more than 10 offers have been received from investors to purchase or jointly develop properties accounting for about 40% of the real estate portfolio of the JV (taking into account the transaction of 2017).
Commenting on the transaction, James Corrigan, Managing Director at Sberbank Investments LLC, said: “Rostelecom is one of our key clients and a long-term partner. This transaction is a great example of our partnership in a non-core business area for the company. The project proves attractive for other Sberbank clients, who act as investors, for example, LEGENDA Intelligent Development. These developments show that the strategy is successful and are a positive signal for our business and the Russian market in general.”
“We are confidently moving forward. By participating in this project we can try a new model for monetization of Rostelecom’s surplus real estate assets. Given today’s sluggish market conditions, it is hard to employ traditional methods (the release and selling). The accumulation of assets that have development potential through external projects launched together with a reputable financial partner allows us to create a professional asset management team and find ways to organise the turnover of the properties in the most appropriate way, including maintaining Rostelecom’s presence in such properties in certain cases,” said Dmitry Kurakin, Vice President and Administrative Director of Rostelecom. “I believe that our companies will feel a real effect from this project next year.”
Sberbank is Russia’s largest bank and a leading global financial institution. Sberbank holds almost one third of aggregate Russian banking sector assets, it is the key lender to the national economy and the biggest deposit taker in Russia. The Central Bank of the Russian Federation is the founder and principal shareholder of Sberbank owning 50% of the Bank's authorized capital plus one voting share, with the remaining 50% held by domestic and international investors. Sberbank has more than 145 million customers in 21 countries. Sberbank has the largest distribution network in Russia with almost 15,000 branches, and its international operations include UK, US, CIS, Central and Eastern Europe, India, China, Turkey and other countries.
Rostelecom (www.rostelecom.ru) is one of the largest national telecommunications operators in Russia and Europe. The Company operates in all segments of the telecommunications market and covers millions of households in Russia.
Rostelecom is an undisputable leader of the broadband and pay-TV markets in Russia with over 12.7 million fixed-line broadband subscribers and over 9.7 million pay-TV subscribers, over 4.7 million of which are subscribed to Rostelecom’s IPTV services.
The Group is a market leader in providing telecommunications services to government bodies and corporates of all levels.
Rostelecom is an important innovator that provides solutions in the field of E-Government, cloud computing, healthcare, education, security and housing & utility services.
Sberbank CIB1 is the corporate and investment banking business of Sberbank. Its key areas of activity are corporate finance (including trade finance), the documentary business2, investment banking services, trade operations with securities, and private equity. Sberbank’s corporate and investment banking business provides integrated financial solutions and investment advisory services to its clients, which include major corporations, financial institutions, sovereign states and federal and sub-federal government bodies and organisations.