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.”