MOSCOW (Reuters) - Russia’s No.2 bank VTB (VTBR.MM) said on Thursday it had sold an 11.82 percent stake in food retailer Magnit (MGNT.MM) worth 62.5 billion roubles ($1.02 billion) to Marathon Group, which is owned by Russian businessmen.
VTB said its stake in Magnit had decreased to 17.28 percent, adding that it still considered its investment in Magnit in February as a long-term move.
Marathon Group was founded in 2017 by businessmen Alexander Vinokurov and Sergey Zakharov.
“Currently, Magnit is an undervalued asset,” Vinokurov said, according to a statement from Marathon Group. He added that the investors aimed to make Magnit Russia’s top retail chain again.
VTB bought a 29.1 percent stake in Magnit from its founder Sergey Galitskiy, who stepped down as its CEO, for around 138 billion roubles, bringing Kremlin influence into the retail sector for the first time.
Magnit’s stores, which target consumers on lower incomes, have struggled to compete against aggressive discounting by rival X5. Last month, the group reported a 42 percent drop in quarterly net profit and said it was unlikely to pay a dividend this year.
VTB said the decision to sell part of its stake in Magnit was based on several factors, including risk management.
VTB chief executive Andrey Kostin said the bank might buy more Magnit shares from the market, but its stake in the retail chain would not exceed 20 percent, Interfax news agency reported.
Reporting by Maria Kiselyova, Olga Sichkar and Oksana Kobzeva; Writing by Vladimir Soldatkin; Editing by Jason Neely and Edmund Blair