System

AFK Sistema OAO
legal form	Corporation
ISIN	RU000A0DQZE3
founding	1993
Seat	Russia , Moscow
management	Vladimir Petrovich Yevtushenkov (Chairman of the Board)
Number of employees	70,000
sales	9.63 billion euros (2017)
Branch	Conglomerate
Website	www.sistema.com

AFK Sistema ( Russian АФК "Система", short for А кционерная ф инансовая к орпорация "Система") is a Russian investment company. Its head office is in Moscow at 13 Mokhovaya St. Sistema was ranked 308th in the 2013 edition of the Fortune Global 500 .

The company's full name is officially Sistema Public Joint Stock Financial Corporation (Sistema PJSFC).

She is a major private investor in Russia's real economy. Sistema's investment portfolio is driven by Russian companies from various industries including telecommunications , retail , high technology , timber , wood processing , pharmaceutical , healthcare , agriculture , finance , hospitality and others.

In 2005, Sistema went public on the London Stock Exchange and raised $ 1.3 billion. The company's shares are traded on the London Stock Exchange (LSE) in the form of Global Depositary Receipts (GDR) under the ticker symbol "SSA". The company's shares are also listed on the Moscow Stock Exchange under the ticker symbol "AFKS". The GDRs traded on the LSE represent approximately 19.0% of Sistema's equity, and the stocks traded on MOEX represent approximately 16.8%. The Sistema Group employs around 150,000 people. Between 2013 and 2016, their companies paid around RUB 290 billion in taxes and social security contributions to the Russian federal and regional budgets. This makes Sistema one of the largest taxpayers in Russia.

Ownership and Management

Vladimir Yevtuzhenkov is a major shareholder and chairman of the board of Sistema (64.2% of the equity). The company's minority shareholders are mostly large Russian and foreign institutional investors.

Michail Shamolin is the President of Sistema.

Companies

The Sistema headquarters in Moscow

Sistema has practically rebuilt the Russian telecom industry from scratch. The company also contributed significantly to the development of Russian airspace technologies, satellite systems and microelectronics, and carries out national projects in health care.

Sistema's investments in fixed assets accounted for around 1.6% of all private investments in Russia between 2013 and 2016. The group companies made 26% of the total investment in telecommunications development and 20% of the investment in the manufacture of electronic components and radio systems. The total contribution of Sistema to GDP and the share of investments in fixed assets in Russia is about 1%.

The group has assets in a wide variety of industries including telecommunications, logistics and wood processing, energy, agriculture, pharmaceuticals, construction, banking, retail, high technology, hospitality, etc.

Sistema is involved in the following companies:

MTS

MTS is a leading telecom operator in Russia and the CIS. The MTS Group has over 109 million mobile subscribers in Russia , Armenia , Ukraine , Turkmenistan and Belarus . The company also provides landline telephony, broadband Internet access and television services in Moscow (through its subsidiary MGTS) and all federal districts of Russia. In 2015, MTS entered the system integration and satellite TV market. MTS also offers financial services, including in collaboration with MTS Bank .

Segezha Group

Sistema took over the Segezha Group in 2014. The optimization of business processes, the expansion of the production facilities, the discovery of new export markets and the implementation of investment projects have all contributed to the Segezha Group being a leading Russian forest holding company today, covering the entire value chain of wood production and wood processing with a global presence. The Segezha Group operates in four major business areas: paper and packaging, wood processing, plywood and wood panels, and wooden houses. Segezha is a world leader in production costs for sack paper and plywood.

The Segezha Group comprises around 50 forestry, wood processing, pulp and paper companies in 13 countries.

Detsky Mir Group

Detsky Mir is the largest children's goods retail chain in Russia and the CIS, operating retail stores under the brand names Detsky Mir and ELC. In February 2017, Detsky Mir had a successful IPO on the Moscow Stock Exchange (the first full IPO of a Russian company since 2014). The share offering was oversubscribed twice. As of December 31, 2016, Detsky Mir Group had 525 stores in 171 cities in Russia and seven cities in Kazakhstan .

Medsi Group

Medsi is Russia's largest federal private chain of clinics. Medsi offers a wide range of preventive, diagnostic and treatment services, including rehabilitation services for children and adults. In 2016, Medsi joined the program of state guarantees of free medical care for Russian citizens in the Moscow region. The company opens new clinics and purchases state-of-the-art equipment.

RTI

RTI is a major defense and microelectronic solutions holding company integrating high-tech, research and manufacturing companies. RTI's companies have their own R&D infrastructure and implement projects in radio and space technology, security and microelectronics that are unique in their size and complexity. RTI includes RTI Systems Concern and Mikron.

In 2016, the Mikron Group reaffirmed its position as the largest Russian manufacturer of microelectronics . It has the only production in Russia based on 180-90-65 nm technology and researches 45 nm technology. The facility in Zelenograd produces over 400 million RFID tags, 50 million bank microchips, 30 million bank cards and over 5 million chips for biometric passports and electronic documents annually. The company exports over 500 million microchips used in the manufacture of electronic devices in Europe and Southeast Asia.

Steppe Agro Holding

Steppe Agro Holding is active in four agricultural segments: crop production , dairy farming , fruit growing and vegetable growing . In 2016, steppe land holdings totaled 315,000 hectares, making Sistema one of the top 10 landowners in Russia. Steppe is showing leading performance results both in the southern region of Russia and nationwide and is running the government's import substitution program.

Binnopharm

Binnopharm develops and produces drugs for the treatment of socially threatening diseases (in areas such as pulmonary medicine , neurology , gastroenterology and infections ). The portfolio includes 17 drugs, some of which were developed by Binnopharm itself (Regevac (a hepatitis B vaccine), binopoietin, binnopherone). The company is a participant in the national Pharma 2020 strategy, which aims to develop substitutes for imported drugs. Binnopharm operates two state-of-the-art pharmaceutical plants in the Moscow region that meet international GMP (Good Manufacturing Practice) standards.

MTS Bank

MTS-Bank was founded in 1993 and has been one of the 50 largest Russian banks since 2016. It offers services to private individuals and corporate clients in Russia. MTS-Bank participates in the government program of bank recapitalization carried out by the Deposit Insurance Agency (DIA) and opens up additional opportunities for the development of the bank and the support of customers by lending to the crucial sectors of the economy.

Hospitality

The Cosmos Group operates and develops hotels owned by Sistema PJSFC. In 2016, the company's portfolio consisted of 17 hotels in 14 cities in Russia and other countries. The Cosmos Group specializes in the management of hotels under well-known international brands (Park Inn by Radisson and Holiday Inn Express ) and other hotels of various price categories and profiles.

Kronstadt Group

The Kronstadt Group is a Russian high-tech company that develops and manufactures knowledge-intensive products and solutions for the production, deployment and safe use of sophisticated air, sea and land-based systems. At the MAKS 2017 Air Show, the company presented its new unmanned flight system (UAS) for medium heights and long distances (MALE) Orion-E. This system is the first drone entirely designed in Russia and made on the basis of domestically produced components. It is also the first drone to fly for 24 hours.

Investment funds

Sistema develops its investment business through mutual funds:

Sistema Venture Capital, a venture fund focused on investing in internet businesses in the growth stage;
Sistema Asia Fund, a venture fund specializing in investing in high-tech companies in India and Southeast Asia;
Rusnano Capital, a joint private equity fund founded by Sistema and the state-owned company Rusnano .

Charity

Sistema invests in social projects and implements a range of charity programs in education, culture and the arts as well as support for vulnerable groups of people. From 2014 to 2016, Sistema spent more than 4 billion rubles on social causes. The Sistema Charitable Foundation is responsible for running all of Sistema PJSFC's charity programs.

The Bashneft case

The Bashneft case is a conflict between the state-owned oil company Rosneft and Sistema PJSFC. It is a constructed one of the most controversial corporate litigation in the history of modern Russia.

On May 3, 2017, Rosneft and Bashneft filed a lawsuit against Sistema PJSFC and its subsidiary Sistema Invest to reclaim 106.6 billion rubles in losses allegedly suffered as a result of reorganizations that were carried out in 2009-2014 when the Company was owned by Sistema. Later Rosneft even increased his demands to RUB 170.6 billion. Sistema shares tumbled after the news of the lawsuit. In the first instance, a court ordered Sistema to pay Rosneft 136 billion rubles in August 2017.

The legal battle with the largest state oil company significantly reduced the market capitalization of one of the leading private companies in the Russian economy. According to some experts, this and the court's premature freeze of 250 billion rubles had a significant negative impact on the investment climate in Russia.

Web links

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↑ МТС Банк получил государственную докапитализацию по программе АСВ на сумму 7.2 млрд рублей
↑ На МАКС-2017 показали первый российский тяжелый беспилотник, способный летать непрерывно сутки
↑ Russian court orders Sistema to pay Rosneft $ 2.3 billion in damages , Reuters, August 23, 2017
↑ Sistema Shares Soar as Putin Says Evtushenkov Charges Not Proven . December 18, 2014. Retrieved December 27, 2014. "Russia has seized 71.6 percent of OAO Bashneft from Sistema since ordering Evtushenkov's arrest on Sept. 16 in a money-laundering investigation linked to the state's sale of the oil company in the previous decade . "
^ Even Loyalty No Guarantee Against Putin . In: The New York Times , The Times Company, December 26, 2014. Retrieved December 27, 2014. “Mr. Rakhimov's government privatized Bashneft, with most of its shares ending up in the hands of a company called Bashkir Capital "
↑ Reuters: Sistema shares plunge a third after $ 1.9 billion Rosneft lawsuit . May 3, 2017.
↑ NZZ , 9 August 2017, page 23

[1] МТС Банк получил государственную докапитализацию по программе АСВ на сумму 7.2 млрд рублей

[2] На МАКС-2017 показали первый российский тяжелый беспилотник, способный летать непрерывно сутки

[3] Russian court orders Sistema to pay Rosneft $ 2.3 billion in damages , Reuters, August 23, 2017

[BBW121814-4] Sistema Shares Soar as Putin Says Evtushenkov Charges Not Proven . December 18, 2014. Retrieved December 27, 2014. "Russia has seized 71.6 percent of OAO Bashneft from Sistema since ordering Evtushenkov's arrest on Sept. 16 in a money-laundering investigation linked to the state's sale of the oil company in the previous decade . "

[NYT122614-5] Even Loyalty No Guarantee Against Putin . In: The New York Times , The Times Company, December 26, 2014. Retrieved December 27, 2014. “Mr. Rakhimov's government privatized Bashneft, with most of its shares ending up in the hands of a company called Bashkir Capital "

[6] Reuters: Sistema shares plunge a third after $ 1.9 billion Rosneft lawsuit . May 3, 2017.

[7] NZZ , 9 August 2017, page 23