Page 108 - RusRPTSept23

According to the Central Bank, at the end of November, the assets of Russian investors in the amount of about RUB5.7 trillion were blocked in the Euroclear and Clearstream depositories, of which about 20% were held by individuals. As of the beginning of November, there were more than RUB280bn on accounts of type C. Since then, the Central Bank has not disclosed this figure. According to Interfax, at the end of last year it was approaching RUB600bn.
While the authorities are deciding on a mechanism for unlocking assets, the second company has already decided to independently negotiate with foreign investors. According to Interfax, Lukoil, following Magnit, decided to buy back its securities from non-residents, whose shares are now actually blocked on C accounts. This will be a huge buyback: the market price of the buyback, according to PSB Analytics, will be about RUB1.1 trillion.
The oil company has already asked the Russian authorities for permission to buy up to 25% of its shares from non-residents at a discount, the agency said. To pay for the securities, Lukoil intends to use the currency from its accounts without resorting to buying it on the domestic market. The discount to market value must be at least 50%. Shares of Lukoil on the Moscow Exchange on this news rose by 5.4% by the close, to a one and a half year high.
This is extremely positive news for Lukoil shares, according to an analyst at Tinkoff Investments. “If the company manages to buy back such a large volume of shares at a 50% discount, then the company will earn about RUB540bn from this transaction alone at current prices,” he calculated. Given the high dividend yield that analysts expect from Lukoil, the value of its shares could rise to RUB7,500 from the current RUB6,600, Tinkoff Investments believes.
After the Magnit case, it was expected that Lukoil would be the closest candidate for a buyout, Promsvyazbank analysts write: the company has historically been one of the favourite securities of foreign funds. In the future, the company may return some of the papers to the market or use them to motivate staff, experts say.
Net purchases of the shares on the Russian market shrank by about 77.9% on the month to RUB2.9bn in July, the central bank said in a research note on August 8. The average share of retail investors in the exchange share trade rose to 81% in July from 80% in June. The non-credit financial institutions were the net buyers of shares in July with the purchases reaching RUB9.3bn. Foreign investors from the friendly countries acted as the net sellers of shares selling RUB10.4bn worth of shares in the month, the regulator said.
RUSSIA Country Report September 2023 www.intellinews.com