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. Last Updated: 07/27/2016

AvtoVAZ Stake Touted to Metals Firms

Itar-TassFrom right, Chemezov, Vladimir Artyakov, Boris Alyoshin and President Vladimir Putin at the AvtoVAZ factory in May.
State arms exporter Rosoboronexport is in talks with metals firms Severstal and Metalloinvest to sell a stake in carmaker AvtoVAZ, Rosoboronexport CEO Sergei Chemezov said Wednesday.

"We will sell a small stake to whoever offers the best conditions," Chemezov told journalists in the far eastern town of Komsomolsk-on-Amur, Russian news agency reported.

Rosoboronexport, which owns around 75 percent of the carmaker, is looking to sell a nonblocking stake in AvtoVAZ, Chemezov said. He did not specify the exact size of the stake.

Chemezov said AvtoVAZ was looking for a partner that could deliver high-quality materials for car bodies. Tying in the partner as an investor would give them an added incentive, he said.

Severstal, headed by Alexei Mordashov, and Metalloinvest, which is majority-owned by Alisher Usmanov, have not yet made any moves to take Rosoboronexport up on its offer, Interfax reported, citing a source familiar with Rosoboronexport's plans.

UralSib analyst Kirill Chuiko said the logic behind Severstal and Metalloinvest buying into AvtoVAZ was not immediately apparent. "I don't see why you have to be a shareholder in your customer," he said. "The key issue for AvtoVAZ is finding a global partner."

Valuing AvtoVAZ at $4 billion, Chemezov said 25 percent of the company would be sold to a strategic foreign investor, while a further 25 percent stake would be sold to investors on the open market. Rosoboronexport will eventually be left with a blocking stake in the firm, Chemezov said.

Analysts have suggested a number of foreign car giants, including Fiat, Renault and Magna International, as potential partners. Magna is part owned by billionaire Oleg Deripaska, whom market watchers have viewed as a potential controlling stakeholder in AvtoVAZ.

Rosoboronexport and Severstal refused to offer further comment Wednesday. Metalloinvest spokespeople could not be reached for comment.