State-owned sovereign wealth fund the Qatar Investment Authority (QIA) is reportedly engaged in discussions with VTB in Russia to acquire some strategic stake in a deal estimated between $3bn and $3.5bn.
Sources close to the potential deal were quoted by The Telegraph as saying that it is expected that the Russian lender will issue new equity as well as mandatory convertible bonds worth $1.5bn each to QIA.
Most likely, the deal may be announced by next week, although both companies declined to comment on the issue.
The divestment plan will provide the adequate capital to VTB boosting its core tier one capital position, while it is also in line with Russia’s state privatization drive, as the government is considering reducing its stake in lender.
Although the deal is in its initial stages, Goldman Sachs and Citigroup are believed to be co-operating with the bank to increase capital, the newspaper said.
VTB Group manages a global business network including more than 30 banks and financial companies in over 20 countries.