Russian Fund, Deutsche Bank to Buy Joint Stake in Rostelecom

By Olga Razumovskaya

MOSCOW--Russia's sovereign wealth fund, the Russian Direct Investment Fund, and Germany's Deutsche Bank AG (DB) are to buy a joint stake in Russian telecommunications company Rostelecom (RTKM.RS) for a combined 7.67 billion rubles ($238 million).

The money from the deal "will be used to further develop and strengthen the company's market position," the Russian fund said in a statement.

The Russian government, which owns 55.2% of Moscow-listed Rostelecom, plans to sell its controlling stake for at least $5 billion by 2016, and the announcement comes not long after senior management changes at the company, which has been in the process of revamping its long-term strategy.

The deal contains agreements relating to call and put options and is structured so that the two investors are protected against a decrease in the share price, in exchange for sharing a portion of the profits when the share price rises.

The transaction has received the necessary approval from Rostelecom, as well as the governing bodies of the Russian fund and Deutsche Bank.

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