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. Last Updated: 07/27/2016

Baturina Puts Inteko's $3.15Bln Into Fund

Yelena Baturina, the billionaire wife of Mayor Yury Luzhkov, has transferred the assets of her company Inteko into a newly formed equity fund, Inteko announced Wednesday.

Baturina is the sole beneficiary of the fund called Kontinental, which will be worth 82.9 billion rubles ($3.15 billion), said Alexei Chalenko, an adviser to Baturina, at a news conference. The deal created the country's largest equity fund by capitalization, he said.

Half of the fund's capital consists of 99 percent of Inteko shares, while the other half includes Inteko's shares in Sberbank, Gazprom and Rosneft, said Igor Krutov, director of the management company that will run the fund, which is also called Kontinental.

The purpose of the fund is to help restructure Inteko, which owns 46 subsidiaries with businesses ranging from construction to cement and plastic-materials manufacturing, Chalenko said. The next step will be the creation of five to six more equity funds, which will band together Inteko's assets according to industrial sectors, he said.

Restructuring through such equity funds is an alternative to setting up a holding company registered in an offshore haven, he said. "We are a Russian company and we want to develop in Russia," he said. The fund has been created to exist for 15 years and will be disbanded in 2021, he said.

As well as reducing tax burdens and making it easier to invest in the assets, equity funds allow beneficiaries to resist hostile takeovers, analysts said.

Luzhkov has said he will not seek more time in office when his current term expires in December.

Previously, the country's largest equity fund was Strategic Investments, which is worth 63.5 billion rubles and is run by Management Center. The fund reportedly owns some assets in LUKoil.