VEB.RF’s Chairman Igor Shuvalov met yesterday with the Chief Executive Officer of the Investment Promotion Agency of Qatar (IPAQ), Sheikh Ali Alwaleed Al Thani. The visit was proposed by His Excellency Sheikh Al Thani, who wanted to learn more about the activities of Russia’s major development institution and explore areas of mutual interest that could encourage cooperation.
During the meeting, Sheikh Al Thani gave an overview of IPAQ, which was launched in July 2019 to attract foreign investment in the country in line with the objectives of Qatar’s National Vision 2030. The IPAQ Advisory Board is chaired by His Excellency Ali bin Ahmed Al Kuwari, Qatari Minister of Commerce and Industry.
Igor Shuvalov described the strategy, principles and priorities of VEB.RF’s operations, the Project Financing Factory programme, and the functional areas of development institutions involved in VEB.RF’s activities. The Qatari delegation particularly took an interest in VEB.RF-financed urban development projects, guarantee mechanisms, and Russian Export Center programmes.
Considerable interest was aroused by Igor Shuvalov and VEB.RF’s Deputy Chairman Alexey Sorokin participating in preparations for the 2018 FIFA World Cup in Russia. Qatar is to host the World Cup in 2022.
The parties agreed to continue communication with each other and search for joint projects.
State Development Corporation VEB.RF sees good prospects for building a mutually beneficial partnership with the Colombian business community, VEB.RF’s Deputy Chairman Daniil Algulyan said in an interview with Russian News Agency TASS on Friday following a visit of VEB.RF’s Chairman to Colombia.
“It was a very important visit. We met with our potential Colombian partners,” said Daniil Algulyan.
According to Daniil Algulyan, VEB.RF sees good prospects for joint projects to develop infrastructure, transport and industry.
Igor Shuvalov: BRICS Inter-Bank Cooperation to Focus on Infrastructure Investment in 2020
On the sidelines of the BRICS Summit in Brazil, VEB.RF Chairman Igor Shuvalov described major areas of cooperation among the development banks of the five economies in 2020. With Russia’s presidency of BRICS, VEB.RF is to be in charge of the association’s Inter-Bank Cooperation Mechanism for one year.
“Top of our agenda is attracting private investment in infrastructure. I mean joint efforts to bolster up public-private partnerships. There is extensive experience of using this mechanism globally. Public-private partnerships should be involved in creating the country’s main infrastructure. It was previously part of VEB.RF’s internal agenda. We are now submitting this issue to BRICS,” Igor Shuvalov said.
A special area of cooperation is a modern urban economy. “Developing an urban economy has a direct impact on quality of life. VEB.RF systematically works to build up competencies in this area. For example, we fully share an understanding of this issue with Brazil’s BNDES. We have their active support for this,” he added.
Additionally, Igor Shuvalov announced plans to continue to work on widening the use of national currencies for international payments. According to Shuvalov, the use of the Russian rouble is a key element in the country’s financial and economic sovereignty. Shuvalov said: “It is necessary for us to maintain our currencies and trade capabilities. We are working to come up with a technological solution for this problem. We need to demonstrate several deals with major players. During our presidency, we will attempt to make as much progress towards this goal as we can.”
The important areas of cooperation also include integrating the national payment systems and digital platforms, along with maintaining the principles of multilateral regulation for international trade and investment relations.
VEB.RF Discusses Investment Cooperation Prospects and Buenos Aires’s Urban Environment Transformation Experience with Argentina
VEB.RF’s delegation headed by Chairman Igor Shuvalov visited Argentina. During the visit, the delegation met with energy companies, YPF and Pampa Energia, and Corporacion America, a group specialising in construction and airport management.
As a guest of honour, Igor Shuvalov visited one of the oldest financial institutions in Latin America, the Buenos Aires Stock Exchange. VEB.RF’s Chairman highlighted the role of business dialogue in strengthening relations between Russia and Argentina and in establishing closer contact between EurAsEC and MERCOSUR. The Argentinian side presented promising projects for joint investment. VEB.RF’s delegation presented Russian export support instruments and the Project Financing Factory’s programme.
VEB.RF’s Chairman also had a meeting with Buenos Aires Mayor Horacio Larreta. During the meeting, the Mayor presented recent developments in the Argentinian capital’s economy, transport, safety and municipal waste management. Igor Shuvalov told him about Russia’s experience in urban transformation and VEB.RF’s involvement in the development of a modern urban economy.
VEB.RF and BRICS Development Banks to Form Common Approaches to Financing for Infrastructure Projects
State Development Corporation VEB.RF signed a Memorandum on Mobilization of Private Investment in Infrastructure with the BRICS Inter-Bank Cooperation Mechanism.
The BRICS Inter-Bank Cooperation Mechanism will create a working group which will study business cases, financing formats, project selection models and legal innovation success stories which contribute to mobilization of private investment in infrastructure.
The Memorandum will establish a new ICM working group and promote the sharing of best infrastructure PPP practices between key BRICS development institutions.
VEB.RF Chairman Igor Shuvalov said “Currently, we see great interest in PPP projects, primarily in infrastructure projects. It is the global trend, which we are striving to implement to ensure sustainable economic growth. The development banks play a special role. Many banks aggregate PPP competencies. We plan to follow this way in Russia by creating an integrated infrastructure development centre. VEB.RF has extensive experience in mobilization of private investment in major transport infrastructure projects; our state corporation’s portfolio features dozens of sea, land and air infrastructure assets. Under the supervision of the Government and the President’s Executive Office, VEB.RF plays a role in promotion of PPP legal instruments to encourage and mobilize investment.”
As a reminder, VEB.RF will hold the presidency of the BRICS Inter-Bank Cooperation Mechanism in 2020. The BRICS Inter-Bank Cooperation Mechanism members are VEB.RF, BNDES, Eximbank of India, CDB, and DBSA. The BRICS ICM was established in 2010 to promote and strengthen economic and investment cooperation between BRICS countries. Currently, the BRICS ICM has five working groups.
VEB.RF and VTB to Finance Coal Transhipment Facility Construction at Port of Vanino
The project will be carried out under the Project Financing Factory programme.
State Development Corporation VEB.RF, VTB and VaninoTransUgol have signed a loan agreement to finance the project to build a high technology transhipment facility at the seaport of Vanino in the Khabarovsk Territory.
Phase 1 of the transhipment facility will have a capacity of 12 million tonnes of coal per annum. The facility’s commissioning and start-up are planned in 2020. The project will create more than 600 new jobs. Overall potential capacity of the facility is up to 24 million tonnes of coal per annum.
The partner banks will provide 34 billion roubles to the project using the Project Financing Factory’s programme. Under the syndicated loan, VEB.RF will provide financing to cover more than one third of the project’s Phase 1 expenses.
VEB.RF’s First Deputy Chairman and Member of the Board Nikolay Tsekhomsky said: “Investment into state-of-the-art port infrastructure is one of the key priorities of VEB.RF. We would like to thank our esteemed partners and are confident that our joint efforts will have not only positive impact on the Far Eastern economy but also will open more opportunities for Russian exports to the Asia-Pacific Region.”
VTB’s Head of Client Coverage and Senior Vice President Dmitry Snesar said: “Financing for the project to build the high technology coal transhipment facility at the seaport of Vanino is the first port infrastructure financing deal between VTB and VEB.RF under the Project Financing Factory. VTB has extensive experience in financing major infrastructure projects. The construction of VaninoTransUgol’s terminal means new infrastructure to develop further Russian coal export and contribute to the economic development of the Far East.”
VaninoTransUgol’s CEO Yuri Tyamushkin said: “Construction of the terminal’s Phase 1 is at an advance stage. VaninoTransUgol is not only developing the Far Eastern economy and infrastructure but is also actively contributing to the regional infrastructure, including corporate housing, educational establishments support, building a talent pool and establishing high living standards in the Far East.”
VEB.RF Finances Ust-Luga’s Gas Chemicals Polyethylene Production Facility
- The loan will be allocated to finance the early phase of the project
State Development Corporation VEB.RF and Baltic Chemical Complex signed a loan agreement to finance the early phase of the project to build the largest Russian gas chemicals facility next to the sea port of Ust-Luga (Leningrad Region). The total capacity of the gas chemicals facility will be up to three million tonnes of polyethylene per annum.
VEB.RF’s loan will be allocated to finance FEED, advance payments under license agreements and subcontracts, including long lead items and other project related expenses.
Financing will be allocated in instalments matching the project’s schedule milestones. VEB.RF financing the early stage of the project will improve significantly credit and investment ratings of the project, which is important to attract other Russian financial institutions, international ECAs and banks.
RusGasDobycha’s CEO Konstantin Makhov said: “We are creating an unprecedented industrial cluster. It will be the largest in Russia. The vertical integration of gas supply and treatment in Russia represents a new economic model for the gas industry. The facility may export its products to Europe, Asia, India, and China. It is a large scale project. The construction phase alone required more than 25 thousand specialists. The start-up of Phase 1 is scheduled in 2023-2024. The full ramp-up will be in 2025. More than five thousand new highly qualified jobs will be created to operate the facility.”
VEB.RF’s First Deputy Chairman and Member of the Board Nikolay Tsekhomsky said: “Today, it is the largest greenfield project with 100% export potential in VEB.RF’s portfolio. As a development institution, we see that it is important to offer financial leverage to the project which will build the largest gas chemicals facility in the world and make Russian products more competitive in the global market.”
Sovcomflot and VEB.RF Sign Financing Agreement for Construction of Pilot LNG Carrier at Zvezda Shipyard
SCF Group, the VEB.RF Group and the Zvezda shipyard formally agreed to finance the construction of a pilot LNG carrier at the Zvezda. The carrier will be time chartered by Novatek for Arctic LNG 2 project.
The ice class (Arc7) will enable the LNG carrier to be used for year-round navigation in challenging ice-bound conditions. The carrier is designed to navigate without an icebreaker escort through more than 2-metres-thick ice.
In total, VEB.RF’s Supervisory Board approved financing for 15 carriers of this type. The supply of carriers will be synchronised with the start-up of Arctic LNG 2.
“It is the seventh vessel to be built by the Zvezda under a loan facility signed here. The vessels will be leased by Sovcomflot. VEB.RF’s governing bodies approved participation in the financing of 21 tankers. The growth of the shipyard’s portfolio will enable our partners to keep localising their manufacturing,” VEB.RF’s Deputy Chairman Artyom Dovlatov said.
VEB.RF and the African Export-Import Bank (Afreximbank) signed a master agreement for VEB.RF’s participation as a confirmation bank in Afreximbank’s Trade Confirmation Guarantee Programme. The agreement was signed at the Russia-Africa Economic Forum in Sochi.
The document was signed on behalf of VEB.RF by its Deputy Chairman Daniil Algulyan and on behalf of the African Export-Import Bank by its Executive Vice President Amr Kamel.
“Providing export support and promoting Russian goods, work and services to open up new markets are high on VEB.RF’s list of priorities. African countries have tremendous potential to develop economic partnerships with the Russian Federation. The VEB.RF Group now has an anchor partner in this area of cooperation. It is Afreximbank. We’ve joined Afreximbank’s Trade Confirmation Guarantee Programme as it will enable us to use Afreximbank’s guarantees to mitigate the risks involved in trade financing transactions with local African banks,” Daniil Algulyan said.
“By signing the agreement, Afreximbank will strengthen its support for Russian companies with a presence in Africa,” Amr Kamel commented.
The African Export-Import Bank (Afreximbank) is a development bank mandated to promote intra- and extra-African trade. In December 2017, Russian Export Center on behalf of Russia became a shareholder of Afreximbank.
The bank is headquartered in Cairo and has regional offices in Cote d’Ivoire, Nigeria, Kenya and Zimbabwe. The bank’s rating: Baa1 (Moody’s), BBB- (Fitch), BBB+ (GSR). Founded in 1993. Authorised share capital: USD5bn. As at the end of 2018, the bank’s total assets were USD13.4bn.
VEB.RF and JBIC Launch Co-financing Programme for Regional Projects
VEB.RF and the Japan Bank for International Cooperation (JBIC) signed a loan agreement to finance the construction of the Sayuri year-round greenhouse facility in Yakutia.
The project will be funded under the agreement to provide co-financing for Far Eastern-based projects with Japanese export content. The document provides for collaboration between VEB.RF and JBIC to arrange financing for regional investment projects supported by Japanese Project Promotion Vehicle in the Far East (JPPV).
JPPV was established by the Far East and Baikal Region Development Fund (FEDF; part of the VEB.RF Group), Far East Investment and Export Agency and JBIC in 2018 to assist Japanese investors in finding local partners and provide information and administrative support for projects. More than 20 projects are supported by JPPV now. Work is under way under cooperation agreements with 16 Japanese companies.
JPPV helps Japanese partners to carry out the project to build a used car recycling plant in the Primorie Territory and a wood pellet plant in the Khabarovsk Territory.
As agreed, JPPV investment projects can receive a total of 15 billion Japanese yen from Japanese lenders for up to 10 years at the initial stage. Russian financing will come from both FEDF and VEB.RF.
“Several key projects are already under way with the participation of Japanese partners. For example, these are Arctic LNG (the project with Japanese involvement to build LNG infrastructure in the Far East) and Khabarovsk Airport development with the participation of a consortium of Japanese investors. We are also interested in encouraging cooperation in implementing projects aimed at creating a high-quality urban environment in large populated places in the Far East, primarily Vladivostok, Khabarovsk and Petropavlovsk-Kamchatsky,” said VEB.RF Chairman Igor Shuvalov.
“Preliminary decisions have already been taken to provide FEDF loans for the Sayuri greenhouse facility. The project is important for the quality of life in the region, delivering a year-round supply of fresh vegetables to local residents. Until recently, more than 80% of such produce had to be imported from abroad,” said FEDF CEO Alexei Chekunkov.
VEB.RF Publishes IFRS Interim Condensed Consolidated Financial Statements as at 30 June 2019
VEB.RF published its interim condensed consolidated financial statements prepared in accordance with IFRS as at 30 June 2019.
The VEB.RF Group’s key financial results for 1H2019 are as follows:
- The VEB.RF Group reported net profit of RUB12.8bn for 1H2019 as against a loss of RUB75.6bn in 1H2018.
- The Group’s operating income in 1H2019 reached RUB41.6bn as compared to RUB16.6bn in the corresponding period in 2018.
- The Group’s assets as at 30 June 2019 totalled RUB3,275.2bn, 2.6% (–RUB86.7bn) down from the beginning of the year. Assets decreased due to a reduction in lending, net lease investments, trading securities and amounts due from banks.
- Lending accounted for 40.6% of the Group’s total assets. As compared to year-end 2018, lending (net of the provision for impairment) decreased by 14.8% (–RUB231.6bn) to RUB1,330.0bn. The decrease was largely due to reclassifying the loans provided by Sviaz-Bank as a disposal group. The lending portfolio was also affected by foreign currency revaluation.
- The provision for expected credit losses was reversed in the amount of RUB17.0bn in 1H2019 (RUB6.0bn in 1H2018).
- The Group’s liabilities as at 30 June 2019 totalled RUB2,937.6bn, 4.6% (–RUB140.2bn) down from the beginning of the year, mostly because of decreased amounts due to banks. Amounts due to customers decreased due to reclassifying the amounts due to Sviaz-Bank customers as a disposal group.
- Amounts due to banks and outstanding debt securities accounted for 50.9% of total liabilities (52.5% at year-end 2018).
- The Group’s equity in 1H2019 went up by RUB53.5bn (+18.8%) to RUB337.6bn as at 30 June 2019. Equity grew due to net profit and government subsidies received by VEB.RF.
- In 1H2019 VEB.RF received a government subsidy as the Russian Federation’s asset contribution of RUB15.5bn to offset part of costs related to the fulfilment of obligations arising from foreign borrowings in the capital markets. The subsidy was recognised in authorised capital.
- In the reporting period VEB.RF also received a government subsidy of RUB9.7bn as the Russian Federation’s asset contribution intended to make a contribution to the share capital of the Far East and Baikal Region Development Fund for the implementation of priority investment projects in the Far Eastern Federal District. The subsidy was recognised in additional paid-in capital.
- VEB.RF’s capital adequacy ratio in accordance with RAS was 14.8% as at 1 July 2019 (11.8% as at 1 January 2019).