French help create new Russian blue chip

French car maker Renault has signed a deal to buy a 25% plus-1 stake in Russian carmaker Avtovaz.

The Russian car producer says it will hold an IPO both on Russian and foreign exchanges this autumn.

Renault is paying $US 1 billion for the stake.

They plan to co-operate on engines and car platforms for the Lada and Renault brands.

Managers will move between the two firms to exchange experience.

They believe they can turn Avtovaz into a world-class company capable of making over one million cars a year.

Avtovaz also plans a second public offering in September. Troika president Ruben Vardanyan says Avtovaz may become a blue chip stock, with its valuation eventually rising to $US 10 billion.

“It can go up to 25% of the shares, it can also become a part of the newer share offering. It depends on the plans that Renault and Avtovaz will agree on during their discussion. In time Avtovaz will see around $US 10 billion, the question is when it will be and how it will be. But valuation of $US 10 billion of Avtovaz will be fare,” expressed his hopes the president of Troika Dialogue Group Ruben Vardanyan.