VTB in talks with Chinese companies over potential EN+ investment
Russian bank VTB is in talks with Chinese companies over a potential investment in energy-to-aluminium group EN+, people with knowledge of the talks told the Financial Times.
London-listed EN+, which was under US sanctions until January this year, controls Rusal, Russia’s largest aluminium producer and the world’s largest outside China.
VTB, the Kremlin-controlled bank that owns 21.68 per cent of EN+, has been approached by two Chinese state-related industrial groups about a potential share sale, according to two people briefed on the talks.
Sanctions against EN+ that in effect cut it off from the global economy were lifted in January after its founder Oleg Deripaska, the Russian tycoon sanctioned by the US for his alleged ties to the Russian government, agreed to give up his controlling stake in the company, which also owns a series of hydropower dams in Siberia that power the Rusal smelters.
Shares in EN+ jumped after the US Treasury lifted the restrictions but at $7.16 are about half the price at the time of its November 2017 listing.
“They are not discussing exact details right now but the interest is serious from both sides,” one of the people said, adding that there was no guarantee of an agreement being reached.
The interest from the unnamed Chinese groups was primarily driven by environmental concerns in China that have increased desire for low-carbon industrial production assets, the second person said: “Chinese companies want to be renewable and so EN+ fits that profile.”
EN+ and VTB declined to comment.
Mr Deripaska’s agreement with the Office of Foreign Asset Control, the US Treasury unit tasked with administering sanctions policy, saw him give up majority control of EN+, with some of his shares transferred to VTB and some voting rights handed over to three US trustees.
Mr Deripaska now owns 44.95 per cent of the company but just 35 per cent of the voting rights. Commodities group Glencore owns 10.55 per cent of shares, smaller shareholders close to 13 per cent.
A person close to EN+ said that they did not expect Ofac would get involved with any share transactions in the company that did not involve Mr Deripaska.
“This won’t be a matter for Ofac,” the person said. “All they care about are [sanctioned individuals].”
“The US Treasury won’t exactly be doing cartwheels over Chinese buyers but a more diverse shareholder base will be seen as a good thing. The more dispersed the better,” the person added.
Russia has sought to build strong business ties with China in recent years in a concerted pivot east amid soured ties with western partners. Chinese groups have made billion-dollar investments in Russian oil, gas and gold companies, partly offsetting the retreat of European and US capital from Moscow.
Additional reporting by Nastassia Astrasheuskaya in Moscow