RDIF, RCIF and leading Middle Eastern investors to support the creation of leading Russian pharmaceutical manufacturer

Press release, 26.04.2019

Beijing, April 26, 2019 − A consortium of investors including the Russian Direct Investment Fund (RDIF, Russia’s sovereign wealth fund), the Russia-China Investment Fund (RCIF, established by RDIF and China Investment Corporation), and the leading Middle Eastern funds, have announced investments in a project to develop JSC PE Obolenskoe into a leading Russian pharmaceutical holding.

In December 2018, Sistema, VTB Bank and Obolenskoe management acquired shares in Obolenskoe from Alvansa Ltd., where Gazprombank and UFG Private Equity are major shareholders. The total investment amounted to RUB 15.5bn.

The Consortium obtained the right to join the deal after thorough analysis of the project was completed. The parties plan to expand the pharmaceutical holding by merging Obolenskoe with the pharmaceutical company Binnopharm, which is controlled by Sistema.

Kirill Dmitriev, CEO of RDIF and Co-CEO of RCIF, said:
“This merger will help Obolenskoe increase its output of a wide range of products thanks to Binnopharm’s modern production facilities. In addition, it will support the development of innovative products and enhance the company’s research & development capabilities. According to our estimates, the proposed consolidation of assets will provide a synergy effect of over RUB 4bn. We expect the company will be able to double its sales in the next four years.”

Bing Hu, Co-CEO and President of RCIF, said:
“The Russian pharmaceutical market is of interest both for local companies and international players. Not only will the merger create one of the largest pharmaceutical companies in the Russian market, but it will also facilitate the development of an R&D center, which would be a compelling prospect for international biotechnology and pharmaceutical companies, including Chinese players.”

Andrey Dubovskov, President of Sistema, noted:
“We are pleased to welcome a new equity partner in Obolenskoe. RDIF and its co-investors invest into promising Russian projects aimed at addressing high-priority tasks that Russian economy faces. RDIF and its co-investors’ decision to join this project to create a pharmaceuticals holding on the basis of Obolenskoe and Binnopharm is a strong confirmation of the project’s investment case and its importance for the development of the sector.”

Yuri Soloviev, First Deputy President and Chairman of VTB Bank Management Board, noted:
“The pharmaceutical industry is one of the fastest growing sectors globally, and it is now also a priority sector for investments in Russia. Sistema is one of the most successful investors and a long-standing partner of VTB. We strongly believe that by working together and drawing in experienced partners, such as the Russian Direct Investment Fund, we will succeed in creating a major pharmaceutical holding and market leader. VTB Group plans to further expand the merged company’s capabilities, and contribute heavily to the development of the pharmaceutical industry – which is one of the most socially significant sectors of the Russian economy.”

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Russian Direct Investment Fund (RDIF) is Russia's sovereign wealth fund established in 2011 to make equity co-investments, primarily in Russia, alongside reputable international financial and strategic investors. RDIF acts as a catalyst for direct investment in the Russian economy. RDIF’s management company is based in Moscow. Currently, RDIF has experience of the successful joint implementation of more than 70 projects with foreign partners totaling more than RUB 1.5tn and covering 95% of the regions of the Russian Federation. RDIF portfolio companies employ more than 700,000 people and generate revenues which equate to more than 5% of Russia’s GDP. RDIF established joint strategic partnerships with leading international co-investors from more than 15 countries that total more than $40bn. Further information can be found at www.rdif.ru

Russia-China Investment Fund (RCIF) is a joint fund, established by the Russian Direct Investment Fund and China Investment Corporation (CIC). The activity of RCIF is aimed at development of bilateral economic, trade and investment relations between Russia and China. Further information can be found at www.rcif.com

Sistema PJSFC is a publicly traded diversified Russian holding company serving over 150 million customers in such sectors as telecommunications, high tech, banking, retail, forest products, agriculture, real estate, tourism and healthcare services. The company was founded in 1993. Its revenue in 2018 reached RUB 773.9bn; its total assets equaled RUB 1.5tn as of 31 December 2018. Sistema's global depositary receipts are listed under the symbol “SSA” on the London Stock Exchange. Sistema’s ordinary shares are listed under the “AFKS” ticker on the Moscow Exchange. Further information can be found at www.sistema.com

JSC PE Obolenskoe is a Russian pharmaceutical company engaged in the development, production and promotion of modern and high-quality pharmaceuticals in accordance with GMP and ISO international standards. The company produces more than 150 prescription and over-the-counter pharmaceuticals. The Company’s portfolio includes both innovative and generic pharmaceuticals. Further information can be found at http://obolensk.ru/

JSC Binnopharm is one of Russia's largest full-cycle biopharmaceutical companies with an in-house R&D division. The company produces biotech pharmaceuticals in several treatment areas (including hepatitis B vaccine, interferons and erythropoietin, a line of pulmonology and neurology drugs, infusion solutions and anti-viral drugs). Binnopharm portfolio includes about 20 pharmaceuticals, 40 more are undergoing development and authorization procedures. Further information can be found at http://binnopharm.ru/

JSC VTB Bank, its subsidiary banks and financial organizations (VTB Group) is an international financial group, offering a wide range of financial and banking services and products in Russia, the CIS, and select countries of Europe, Asia, and Africa. VTB Bank provides a full range of banking services through a wide network of branches. Its subsidiary organizations offer insurance, leasing, factoring and other financial services. VTB Group has the most extensive international network of any Russian bank, with more than 20 banks and financial companies in more than 20 countries. As of 31 December 2018, the Group was the second largest financial group in Russia by assets (RUB 14.760tn) and by customer accounts (RUB 10.403 tn). The Government of the Russian Federation is VTB Group’s main shareholder and owns 60.9% of the voting shares through the Federal Property Management Agency. Further information can be found at http://vtb.ru/

For additional information contact:
Arseniy Palagin
Russian Direct Investment Fund
Press Secretary
Tel: +7 495 644 34 14, ext. 2395
Mobile: +7 916 110 31 41
E-mail: arseniy.palagin@rdif.ru

Andrew Leach / Maria Shiryaevskaya
Hudson Sandler
Tel: +44 (0) 20 7796 4133

Jessy Zheng
Russia-China Investment Fund
Beijing, China
Tel.: +86 10 5762 9000
Fax: +86 10 57629111
jie.zheng@rcif.com

Yury S. Trofimov
Russia-China Investment Fund
Moscow, Russia
Tel.: +7 (495) 230-05-55 ext. 4243
Mob.: +7 (985) 765-13-12
yury.trofimov@rcif.com