Avtovaz, Russia’s biggest carmaker, has confirmed plans to sell up to 25 per cent of its shares in London and Moscow this autumn, as it sealed a deal with Renault giving the French carmaker privileged access to the country’s fast-growing car market.

A final decision will be made in May when global market conditions may become clearer, says Ruben Vardanyan, chief executive of Troika Dialog, the Moscow investment bank that holds a 25 per cent stake.

Sentiment for new shares issues has been hurt by the turmoil in the global credit markets, but the plan by Avtovaz suggests volumes could pick up later in the year.

Bankers say investors are likely to have an appetite for companies with attractive growth stories.

Renault agreed to pay $1.17bn for a 25 per cent blocking stake in Avtovaz, putting the French company at the core of the world’s third-largest carmaking group after General Motors and Toyota, but could present Renault and its Japanese alliance partner Nissan with management challenges, analysts said.

Renault will supply four members of Avtovaz’s five-person executive committee, Carlos Ghosn, Renault/Nissan’s chief executive, said.

The French carmaker will control three of the 12 seats on Avtovaz’s board of directors.

Renault has agreed to revive Avtovaz’s Lada brand, and Mr Ghosn said Avtovaz would nearly double its output by 2014 to 1.5m vehicles.

Avtovaz will use Renault’s production platforms and engines, and the relationship will be “even higher intensity” than its ties with Nissan, Patrick Pelata, the carmaker’s head of product planning, told the Financial Times.

Renault will be equal partners with Russian Technologies, the state-owned corporation built on the back of state arms exporter Rosoboronexport, and Moscow brokerage Troika Dialog.

Renault will pay $1bn up front, plus another $166m at the end of 2010 depending on Avtovaz’s earnings, a total slightly less than the stake’s current market value. Mr Vardanyan valued the company’s market capitalisation at $5bn.

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