Alexander Vinokurov bought shares of Magnit for 60 billion rubles from VTB

VTB Group sold 11.82% of Magnit's shares to Marathon Group, the son-in-law of Foreign Minister Sergei Lavrov, Alexander Vinokurov. As a result, VTB's share decreased to 17.28%. The amount of the transaction was at least 60 billion rubles.
Whence such money at mister Vinokurova - it is not clear.

Check "Magnet"

VTB became the largest shareholder of Magnit in this year, having bought most of the stake from the founder of Krasnodar retailer Sergei Galitsky. As a result of the transaction with Marathon, VTB's share decreased to 17.28%, the state bank said.

VTB became the largest shareholder of Magnit in this year, having bought most of the stake from the founder of Krasnodar retailer Sergei Galitsky. Then the bank received about 29% for 138 billion rubles. As a result of the transaction with Marathon, VTB's share decreased to 17.28%, the state bank said.

"They sold it naturally to profit," explained Yury Soloviev, the first deputy chairman of the board of the state bank, answering journalists' questions at the St. Petersburg Economic Forum. The deal passed at the market price with the income for the bank, he added, refusing to disclose the amount of the deal. The loan for the Marathon Group for the transaction was provided by VTB itself, the representatives of both companies say.

According to Solovyov, the deal is organized in the form of a repo for "the convenience of operating a bank with these shares," he did not answer in more detail why he needed such a scheme of the deal.

How Marathon reached

The initiator of the deal was Marathon himself, says a source close to one of the parties to the talks. They, he said, began in late February or early March.

According to Soloviev, Vinokourov's group was not the only one, he was interested in Magnit: VTB received several offers to sell a stake in Magnit immediately after the purchase. "We chose, from our point of view, the ideal investor: he has a lot of experience in this industry. At a price they were quite competitive. Since the shares of "Magnit" are traded on the exchange, the deal can be made in one day ", - explained Soloviev.

For the Marathon Group, according to its own data, it is a strategic investment. "We initially announced our interest in projects in the retail sector and are pleased to have the opportunity to participate in the development of the largest Russian retailer," said the company's president Alexander Vinokurov.

Until now, the Marathon Group, founded a year ago by Vinokurov and his partner Sergei Zakharov, was known, mainly thanks to investments in the pharmaceutical industry. Last summer, the group agreed with the state corporation Rostek to combine pharmaceutical assets. The combined company will include the daughter of Rostech, Natsimbio, distribution and production assets of the Marathon Group, in particular the distributor of drugs "SIA groups".

According to Vinokurov, Magnit is now undervalued. "We believe that with certain efforts on the part of management and shareholders of the network it will be possible to return its fair value and the first place among Russian retailers," he argues.

According to the group's message, its interests in the retail sector are not limited to the acquisition of a stake in Magnit: "The company will continue to work on projects to expand its presence in the market, for which the Marathon Retail sub-holding was formed."

Why VTB co-investors

VTB in the transaction report noted that one of the reasons why the state bank decided to sell part of its stake is the risk profile of the investment. "Shares are the most volatile instrument. <..> We have a limit on private and public investment. After the sale, the risk profile declined, "explained Soloviev. "For our overall risk appetite for risk metrics, for the volatility of this stock, we understand that the optimal ownership for the VTB Group will be within 20%."

Another factor - the share is sufficient to participate in the management of the company through the board of directors, follows from a report by VTB. "We do not influence the company in the way that Sergey Nikolayevich [Galitsky] influenced," Soloviev acknowledged. VTB, he continues, works as an institutional investor and sees great potential for growth in the value of the company. "It is important for us between our companies, where we have interests - this is Tele2, and" Russian Post "and Post Bank - to create a synergistic effect in logistics, in creating one electronic platform, and a chain of stores," he said.

As Solovyov said, in the coming months, stores will be opened in the offices of the Russian Post, the assortment of which will be managed by Magnit. In small branches, the assortment will consist of 400 kinds of products, in larger ones - up to 600.

Alexander Vinokurov reached for "Magnet"
RBC, May 24, 2013

VTB Group sold 11.82% of the shares of the network "Magnet". The buyer is the investment "Marathon Group", created by Alexander Vinokurov and Sergey Zakharov. The transaction was reported in the messages of the parties.

The amount of the transaction is not disclosed, the acquired stake is estimated at 62.5 billion rubles. based on the value of the shares of "Magnit" at the close of trading on May 23, 2018. The deal involved the Group's own money and borrowed funds, it was structured according to the repo scheme, the report said.

Upon completion of this deal, VTB Group, along with other shareholders, will continue to actively participate in the development of Magnit's business and maintain the best corporate governance standards adopted in public companies, the financial institution said.

"Marathon Group" initially announced its interest in projects in the retail sector, are given in the press release of the word Vinokurova. "Magnet" is now an undervalued asset, he believes. "With certain efforts on the part of management and shareholders of the network, it will be possible to return its fair value and the first place among Russian retailers," the president of the Marathon Group believes. Magnit is a long-term investment for Marathon Group, Vinokurov said in an interview with RBC. "It is more likely that our share will increase in the medium term than the sale of the stake," he added.

Who became a co-owner of Magnit

"Marathon Group" was founded by Alexander Vinokurov in 2017. The holding specializes in four areas: pharmaceuticals, FMCG and retail, transport infrastructure and agriculture, he told RBC.

The sub-holding "Marathon Pharma" includes production companies "Synthesis", "Biocom", "Fort", "Bentus Laboratories", distributor of "SIA Group" and pharmacy operator "Mega Farm" (networks "A-Mega", "Yes, healthy ! "And" ABC Life "). The investment group also has an agreement on the merger of several pharmacies with the state corporation Rostek.

The second sub-holding, "Marathon Sport", includes the group's sports assets: the club "Section", the company IQSport, the professional cycling team Marathon-Tula Cycling Team.

After buying a stake in Magnit, the company has already formed the third sub-holding - Marathon Retail, the report said.

From private to public

Network "Magnet" was founded by Sergei Galitsky in 1994 as a distributor of household chemicals, the first stores were opened in 1998. The businessman always remained the main owner of Magnit and managed the company himself. By 2006, when the network numbered 1,500 stores, the retailer held an IPO, selling a 19% stake for $ 368 million. In 2013, Magnit became the largest retailer in Russia in terms of turnover, overtaking its main competitor X5 Retail Group , which manages the networks Pyaterochka, Perekrestok, Karusel. "I'm afraid to seem indiscreet, but for the first time in 15 years since the opening of the first store, we have become a sales leader," Galitsky said at the time.

But in 2016, Magnit began to have problems: at the end of the year the company for the first time in its history reduced profits and lost first place to X5 Retail Group. In 2017, the company's financial performance continued to deteriorate: the company's net profit fell by 34.7% year-on-year. Investors were unhappy with the results of the network: by April 2018, the shares of "Magnet" in comparison with February 2016 fell almost twice. As a result, X5 Retail Group for the first time in seven years outperformed "Magnet" and by capitalization.

As a result, according to RBC sources from Galitsky's entourage, because of pressure from investors and "general fatigue", he took first of all an "emotional decision" about the sale of the company. In February 2018, the businessman announced the sale of his 29.1% stake in VTB Capital for 138 billion rubles, leaving less than 3% of the shares of Magnit.

"In a nutshell: I think that this difficult decision for me was due to the fact that this is a very long process. After all, I founded this company, but time goes by, nothing lasts forever, "commented on his decision to sell Galitzky's shares at a press conference, while clearly restraining tears. Investors see the future of the company in a different way, and, as the businessman summarized, he will not "stand across the process." "Simply during one of the conversations, Sergei Nikolaevich expressed the wish that, probably, it was time for him to sell the company, that he wants to concentrate, as he said, on the problems of children's football", - assured then VTB President Andrei Kostin. VTB will not be "forever" a shareholder of "Magnit", assured the head of the state bank. First deputy chairman of the bank Yury Soloviev then added that the bank expects to remain a shareholder for at least two or three years.

As Vinokurov told RBC, Marathon Group had an interest in buying a stake in Magnit immediately after VTB deal. "As an investment company, we must be able to respond quickly to the opportunities that the market provides. The opportunity appeared - we used it, "he explained.

VTB plans to use its participation in Magnit, including for the network's cooperation with Post of Russia. The partnership of the postal operator and "Magnit" should create the new largest player in the market of trade. Now the Russian Post manages 42 thousand branches throughout the country, and this is 2.5 times more than that of Magnit, which is already Russia's largest retailer.

The market reacted negatively to the news about the deal between VTB and Magnit: on the day of the announcement, the stock fell almost 8% on the Moscow stock exchange, to 4473 rubles. for a paper, global depositary receipts on the London Stock Exchange - by 10%, to $ 17.64 per share. The reason for the decrease was, among other things, the very fact of Galitsky's departure from the administration. In addition, it is "the growth of indirect state property in the economy," explained Alexander Abramov, head of the Institute for Analysis of Institutes and Financial Markets at the Institute for Economic and Social Analysis of the Russian Academy of Sciences.

Longtime acquaintances

Vinokourov and VTB already worked together in retail. Almost a decade ago, in 2009, the investment division of the bank - VTB Capital and the investment fund TPG Capital, whose vice-president was Vinokurov at the time, together bought 35.4% of the shares of Lenta retail chain from its founder Oleg Zherebtsov. In 2011, TPG and VTB together with the European Bank for Reconstruction and Development (EBRD) received a controlling stake in the retailer - more than 85% of the network. After attracting new investors through additional issues, TPG's share fell to 34%, EBRD to 7.4%. VTB also gradually reduced its share, and in 2015, VTB Capital had only 4% of the shares. After that, the bank did not disclose the size of its package. According to the source of RBC, close to the bank, the financial organization still owns about 5% of the network.

And again as leaders

"The first place is not for us," Galitsky said after Magnit lost leadership in 2016. But taking into account the emergence of a new shareholder, the concept of network development has changed, and Magnit again intends to claim leadership. As the general director of the network and one of the key top managers of Halytsky's team Khachatur Pambukhchan (working on the network since 2006) stated last week, the company sets a goal to return the leadership in terms of revenue and net profit.

Almost immediately after the transition of "Magnit" to VTB, the development of a new retailer strategy began. Work on the strategy together with Pambuhchane new shareholders attracted the former top manager of the main competitor - Olga Naumova. In April, she resigned from the post of general director of the Pyaterochka network, which is part of the X5 Retail Group. "Magnet" already has a "better team", will continue to strengthen it and invite "people regardless of where they worked before," Pombuchkhan said. In the "Magnet" will form a new system of corporate governance, confirmed Vinokurov.

Now the market needs "growth, the number of discoveries, like-for-like (comparable sales - RBC) and aggression," Galitsky himself said in February, announcing a deal with VTB. In comparison with its competitors, Magnit is still behind in these indicators. The revenue of X5 Retail Group in 2017 increased by 25%, the third largest chain "Lenta" - by 19%, and "Magnit" - only by 6.4%. Of the top 3 largest chains, Magnit alone reduced its comparable sales and net profit.