Troika Dialog is "ready to exit" AvtoVAZ and book a profit on its 25 percent stake in the struggling carmaker, Troika chairman Ruben Vardanyan said in an interview.
AvtoVAZ needs to increase the liquidity of its publicly traded shares to attract investors as it struggles to return to profitability, he said Thursday in Moscow.
"We've always said that we are a financial investor," Vardanyan said. "We're ready to exit. We'll need to exit the investment. It'll be the right thing to do from the point of view of creating greater liquidity for the shares."
Prime Minister Vladimir Putin's government has provided AvtoVAZ with 65 billion rubles ($2.2 billion) in emergency funding after plunging car sales forced the company to fire 24,000 employees, about one-quarter of its work force.
Renault, which owns 25 percent of AvtoVAZ, vowed in November to transfer 240 million euros ($330 million) of technology to help the company develop new models and improve efficiency.
Vardanyan declined to say how or when Troika plans to sell its AvtoVAZ stake. KIT Finance, a Moscow-based brokerage, said Troika might seek to sell some or all of its shares via a stock exchange, which could increase investor interest in the company at a time when the government is seeking partners.
State corporation Russian Technologies, which also owns 25 percent, may pay off some of the automaker's debt in exchange for new shares, Finam said Friday in a research note.
About 10 percent to 15 percent of AvtoVAZ's shares are freely traded, said Artyom Lavrishchev, a transportation analyst at KIT Finance.
"AvtoVAZ's free float is less than $200 million, and that's not really enough for institutional funds," Lavrishchev said. The daily trading volume of AvtoVAZ's smaller rival Sollers, a partner of Fiat, is about three times as much, he said.
AvtoVAZ's board last week approved a plan to spend 3 billion euros on development through 2020 and vowed to return to profit by the end of this year after two years of losses.
The carmaker plans to increase annual output to 1 million of its Lada brand cars by 2020. It sold 349,490 Ladas last year, a 44 percent drop on the previous year.
Troika in 2007 helped Russian Technologies unwind the automaker's shareholding structure, which involved units owning stock of the parent company.
Troika sold 25 percent of AvtoVAZ to Renault in 2007 for $1 billion, which is more than the entire company is worth now. AvtoVAZ closed down 0.6 percent on the MICEX on Friday, giving it a market value of about 20.8 billion rubles ($710 million).
"We did our job in such a way so that AvtoVAZ would not have any problems with shareholder structure, with corporate governance," Vardanyan said. "So if it wants to borrow it can, sell shares, it can now. The main thing is to be flexible as to how" to raise funds given recent market volatility, he said.