VTB Group rose to a two-week high, leading gains on the Micex Index, after the Telegraph reported Qatar’s sovereign wealth fund is in talks to invest as much as $3.5 billion in Russia’s second-biggest lender.
VTB climbed 1.5 percent to 5.64 kopeks by the close in Moscow, its highest level since Jan. 29, with trading volume at about 5.7 times the stock’s three-month daily average. VTB added 0.8 percent to $3.74 by 3:48 p.m. in London. The lender surged 5.3 percent in Moscow yesterday and 6.1 percent in London.
As part of the deal, the details of which may be announced next week, VTB will issue $1.5 billion in new equity and $1.5 billion of mandatory convertible bonds to the wealth fund, the U.K. newspaper reported, citing unidentified people familiar with the deal. Russian First Deputy Prime Minister Igor Shuvalov said in an interview last month VTB is meeting sovereign wealth funds and other investors to sell new shares totaling at least $3 billion. VTB shares slumped 8.8 percent last year.
The stock has underperformed because of concern about additional placement and the Tier 1 capital ratio nearing a 10 percent minimum, according to Julian Rimmer, a trader of Russian and Turkish stocks at CF Global Trading in London. “If the Qataris are buying into VTB then both problems are allayed in one fell swoop,” Rimmer said by e-mail.
VTB’s press office declined to comment on the newspaper report by e-mail.
Goldman Sachs Group Inc. and Citigroup Inc. bankers are working with the Russian lender on raising capital, according to the Telegraph.
In February 2011 VTB raised $3.3 billion by selling a 10 percent stake at 9.1468 kopeks a share, below its 2007 initial public offering price. Shuvalov said last month VTB will not issue shares at a price that is below what it secured in 2011.