SSA.L Regulatory News (SSA)

RDIF, RCIF and Middle Eastern investors to acquire stake in OBL Pharm

Moscow, 26 April 2019 - Sistema PJSFC ("Sistema") (LSE: SSA, MOEX: AFKS), a publicly traded diversified Russian holding company, announces that a consortium of investors comprising the Russian Direct Investment Fund (RDIF), the Russia-China Investment Fund (RCIF) established by the RDIF and China Investment Corporation, and leading Middle Eastern funds (the "Investment Consortium") will join the project to create a major Russian pharmaceutical holding on the basis of JSC Pharmaceutical Enterprise Obolenskoe ("OBL Pharm").

Under the legally binding agreement, the Investment Consortium will acquire a stake in OBL Pharm for an amount exceeding RUB 4 billion. Upon completion of the transaction, the Investment Consortium's effective stake will be 28%, VTB Bank will own 46% and Sistema will hold 13%. The transaction whereby the Investment Consortium will acquire equity in OBL Pharm is expected to close by the end of the second quarter 2019, pending that a number of conditions are met, including the receipt of corporate approvals.

In December 2018, Sistema, VTB Bank and members of the management team of OBL Pharm acquired shares of OBL Pharm from Alvansa Ltd, which is majority-owned by Gazprombank and UFG Private Equity. The investment totalled RUB 15.5 billion.

Members of the Investment Consortium received the right to join the transaction following the completion of additional analyses. The parties plan to expand the pharmaceutical holding by combining OBL Pharm with Binnopharm, a pharmaceutical company owned by Sistema.

Andrei Dubovskov, CEO and President of Sistema, said: "We are pleased to welcome a new equity partner in OBL Pharm. RDIF and its co-investors invest into promising Russian projects aimed at addressing high-priority tasks facing the Russian economy. RDIF and its co-investors' decision to join this project to create a pharmaceuticals holding on the basis of OBL Pharm and Binnopharm is strong confirmation of the project's investment case and its importance for the development of the sector."

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 4 bn. 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 centre, which would be a compelling prospect for international biotechnology and pharmaceutical companies, including Chinese players."

Yuri Soloviev, First Deputy President and Chairman of VTB Bank Management Board, said: "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."

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Sistema PJSFC is a publicly traded diversified Russian holding company serving over 150 million customers in such sectors as telecommunications, high tech, banking, retail, pulp & paper, agriculture, real estate, tourism and healthcare services. The company was founded in 1993. Its revenue in 2018 reached RUB 773.9 billion; its total assets equalled RUB 1.5 trillion as of 31 December 2018. Sistema's global depositary receipts are listed under the symbol "SSA" on the London Stock Exchange. Sistema's ordinary shares are listed under the "AFKS" ticker on the Moscow Exchange. Website: www.sistema.com

Russian Direct Investment Fund (RDIF) is Russia's sovereign wealth fund established in 2011 to make equity co-investments, primarily in Russia, alongside reputable international financial and strategic investors. RDIF acts as a catalyst for direct investment in the Russian economy. RDIF's management company is based in Moscow. Currently, RDIF has experience of the successful joint implementation of more than 70 projects with foreign partners totaling more than 1.5 trillion rubles and covering 95% of the regions of the Russian Federation. RDIF portfolio companies employ more than 700,000 people and generate revenues which equate to more than 5% of Russia's GDP. RDIF established joint strategic partnerships with leading international co-investors from more than 15 countries that total more than 40 billion dollars. Further information can be found at www.rdif.ru

Russia-China Investment Fund (RCIF) is a joint fund, established by the Russian Direct Investment Fund and China Investment Corporation (CIC). The activity of RCIF is aimed at development of bilateral economic, trade and investment relations between Russia and China. Further information can be found at www.rcif.com

JSC VTB Bank, its subsidiary banks and financial organisations (VTB Group) is an international financial group, offering a wide range of financial and banking services and products in Russia, the CIS, and select countries of Europe, Asia, and Africa. VTB Bank provides a full range of banking services through a wide network of branches. Its subsidiary organisations offer insurance, leasing, factoring and other financial services. VTB Group has the most extensive international network of any Russian bank, with more than 20 banks and financial companies in more than 20 countries.  As of 31 December 2018, the Group was the second largest financial group in Russia by assets (RUB 14.760 trillion) and by customer accounts (RUB 10.403 trillion). The Government of the Russian Federation is VTB Group's main shareholder and owns 60.9% of the voting shares through the Federal Property Management Agency. For more information please visit www.vtb.com

OBL Pharm is a Russian pharmaceutical company engaged in the development, production and marketing of modern, high-quality pharmaceuticals in accordance with GMP and ISO standards. The company produces more than 150 prescription and over-the-counter pharmaceuticals in a number of treatment areas. The company's portfolio includes both innovative and generic pharmaceuticals. More information is available on the company's website: http://obolensk.ru/

JSC Binnopharm is one of Russia's largest full-cycle biopharmaceutical complexes with an in-house R&D division. The company produces biotechnological treatments, including a hepatitis B vaccine, interferons and erythropoetins, a line of pulmonology and neurology drugs, infusion solutions, and anti-viral drugs. Binnopharm has more than 20 different products in its portfolio. An additional 40 drugs are currently in development or registration. More information is available on the company's website: http://binnopharm.ru/

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For further information, please visit www.sistema.com or contact: