Metals tycoon to buy half of Russia's RenCap
MOSCOW (Reuters) - A Russian metals tycoon will buy half of Renaissance Capital, one of Russia's biggest home grown investment banks, for $500 million in a sign the credit crisis has brought some of Moscow's high flyers down to earth.
Renaissance and its larger global peer Morgan Stanley (MS.N) on Monday joined a growing list of banks set to receive fresh equity from cash-rich investors as global liquidity evaporates.
A Renaissance spokesman said the Onexim Group of Mikhail Prokhorov, who made his fortune in metals giant Norilsk Nickel (GMKN.MM) and banking, will buy new equity amounting to 50 percent of Renaissance. He said old shareholders will retain a one-share voting majority.
Onexim said it is buying the stake for $500 million. Onexim chief executive Dmitry Razumov, a former Renaissance Capital employee himself, said Onexim would transfer most of the money on Monday and open additional lines of credit to the bank.
"People are surprised at the value implied in the Prokhorov deal," Uralsib equity strategist Chris Weafer said. "That is a bit of a reality check on the damage that has been done to the value of the investment banking business."
"The current value is definitely in the bargain basement."
State bank VTB (VTBR.MM) considered buying Renaissance for $4 billion, but the deal never happened, Vedomosti newspaper wrote last year. Renaissance has declined comment on the report.
Senior Russian investment bankers say the turmoil could force a round of consolidation on the broking scene. The founder of another of Moscow's biggest, oldest financial institutions, Troika Dialog, rejected talk his own bank was for sale.
"There is no need to sell Troika right now. It is a time to buy, not to sell," Troika's core owner, Ruben Vardanyan, considered a father of the Russian stock market, told Reuters.
A senior manager at state bank Sberbank (SBER03.MM) said talk that his bank was in negotiations to buy Troika were "only rumors."
The chief of VTB, which helped finance a Gazprom (GAZP.MM) controlled bank's buyout of broker KIT Finance after it failed to meet some obligations on a repurchase agreement last week, said over the weekend his bank would emerge "stronger" from the crisis.
"NO LOSSES OR WRITEDOWNS"
Renaissance, founded in 1995 by a cadre of former CSFB bankers who helped open post-Soviet Russia to world markets, said it had suffered no losses or writedowns in last week's stock market collapse, which saw key indices fall more than 50 percent from their May peak.
Renaissance Capital chief Stephen Jennings told a news conference the Prokhorov investment would raise the bank's capital to $800 million, and net profits of $400 million were expected this year.
"The partnership creates an investment bank with a strong and very liquid balance sheet well placed to aggressively pursue growth opportunities arising from the ongoing turmoil in global financial markets," Jennings, one of Russia's most established bankers, said in a statement.
A financial source said the deal concerned only Renaissance's investment banking business, not its private equity, asset management or consumer finance operations.
Renaissance Capital spokesman Quinn Martin said the talks had been underway for months.
Prokhorov, who has said he views the credit crisis as a good time to buy assets, said he wanted to use Renaissance, which has operations in the former Soviet Union and Africa, as a platform to build a global bank.
"We should stake out a position on emerging markets," Prokhorov told a news conference, adding the bank would "look at western markets, depending on what is happening there."
(Reporting by Melissa Akin; Editing by Hans Peters and Jon Loades-Carter)
