Tuesday, 25 September 2007

Quinn group splashes out €106m for Russian mall

Irish Independent

Jason Corcoran in Moscow

Tuesday September 25 2007

The property arm of Ireland's richest man, Sean Quinn, has splashed out an estimated $150m (€106m ) to buy its first shopping centre in Russia.

Quinn Property Management has acquired a shopping mall and entertainment complex in Ufa, a city of one million people situated in the south-west Urals some 730 miles east of Moscow.

The new 120,000 square metre Avrora Centre is scheduled to open later this year and features a cinema, bowling alley, swimming pool and climbing wall, as well as retail outlets.

A Quinn spokesman said: "This is a combined shopping and leisure centre project that has just started construction. It will take two years to build the project. The group is also in the process of developing a logistics park in the city and this project complements operations there. All the major Russian and international retailers who are active in Russia have expressed interest in Ufa and in this project in particular."

The group declined to disclose the cost and the seller but Moscow real estate analysts put the likely cost at about $150m (€106m) for the shopping mall on its own.

The anchor tenants in Russia's biggest shopping centre chain Mega Mall include Sweden's IKEA, French hypermarket Auchan and Finnish retailer Stockmann. Quinn will be looking to sign up similar big names.

Ufa, the capital of the Russian Republic of Bashkortostan, is an industrial hub involved in petrochemical and manufacturing. The site for the mall is in the centre of the city with an immediate catchment area of more than 300,000 people. Having secured the project earlier in the year, the group used a UK-based architectural firm to complete the design. A Quinn team in Ufa will now manage the construction directly.

The reclusive Fermanagh-born billionaire has about 40 people involved in scouring for property development opportunities in eastern Europe, Russia and India.

Sean Quinn is the most prominent Irish investor in Russia having spent some €100m on a chain of DIY hypermarkets as well as €75m on a logistics park.

The property business, which has earmarked a total of $5bn (€3.5m) to spend in the region, has already acquired shopping malls in Turkey and Ukraine and a string of office blocks, retail stores, logistics centres and hotels in the region.

It has completed office projects in Moscow and Kiev and is also constructing large-scale logistics projects in Moscow, Rostov-on-Don and Kazan. The Caspiy Centre, a six-story business block near Moscow's main airport, is due to open in the middle of next year.

Up and running assets in Moscow are currently selling for a 9-11pc yield while the regional cities are achieving an even higher price.


Monday, 24 September 2007

VTB hires for new global markets arm

Financial News

Jason Corcoran in Moscow

24 Septembe 2007

Russian state-run bank VTB has appointed a former McKinsey consultant to develop its move into investment banking following the defection last week of Vasily Kirpichev to Dresdner Kleinwort.

Julia Chupina, a VTB board member, has replaced Kirpichev, who moved to London four months ago to take responsibility for VTB Europe, the investment banking start-up.

Steve Thunem, head of VTB’s newly created global markets group, said the bank plans to hire 60 staff in London and between 20 and 30 people in Moscow, for the new venture. VTB’s London team is moving into new offices next year at 14 Cornhill. The 6,360 sq m space is double that of its King William Street offices and is sufficient for a trading floor.

He said: “Investment banking will not be solely London-based. There will be two hubs in Moscow and in London. The intent is to manage Moscow-based investment banking activities in a separate entity, integrated with the London hub. Logically, it would make sense to locate activities such as equity trading and domestic sales, research, rouble bond trading and distribution in Moscow. We are also likely to develop sales and distribution in New York and Singapore.”

Thunem, who came from Dutch-owned bank ABN Amro in April, has been joined by former colleagues George Niedringhaus and Edward Bungey as head of fixed income and senior fixed income sales person, respectively. Martin Pasek, formerly at Credit Suisse, has been hired as head of structured products.

VTB is also seeking a head of investment banking, a head of equity markets and a team of 20 analysts and plans to build a small M&A advisory group. Russian banks are locked in a fight for talent with western rivals, such as Goldman Sachs and Lehman Brothers, which are building teams in Moscow.

One senior banker who was approached for a job, said: “I am not sure the $50m (€35.4m) earmarked for between 15 and 20 bankers’ salaries is enough to work for a Kremlin-controlled bank. The headhunters, the Rose Partnership, do not have anyone in Moscow and do not seem overly familiar with the Russian banking scene.”

The battle to secure top bankers has resulted in a merry-go-round among leading investment banks. Dresdner hired Kirpichev after the defection last year of its senior rainmaker Bob Foresman, head of the bank’s Moscow office, to Renaissance Capital, the leading independent investment bank operating in Russia.


Thursday, 20 September 2007

Renaissance's new Africa fund seen capped at $1bn

Business New Europe

Jason Corcoran in Moscow


Russia's Renaissance Investment Management expects to take in commitments worth $350m from institutional investors shortly after the launch of their new Africa fund on October 1.

The fund manager, which is a subsidiary of Renaissance Capital investment bank, is confident of capping the sub-Saharan equity fund at $1bn in 2008. "We have seen enough interest from fund of funds and institutions that we don't need to seed it. We expect to raise $350m by the end of the year and then we aim to cap it at $1bn next year," Daniel Broby, who was hired as chief investment officer three months ago, told bne.

Prior to Renaissance, Broby was head of investments at Denmark's third-largest asset manager Bankinvest, responsible for the investment process and the day-to-day running of the quoted equity, bond and guaranteed products. He launched Denmark's first and only regulated hedge fund on behalf of Bankinvest in 2005.

Broby said David Damiba, a Wall Street veteran of Merrill Lynch and Madoff Investment, and Kirsten Goliath have been hired to run the fund from London.

Renaissance's Dublin-listed fund, which requires a minimum investment of $100,000, will have strict redemption terms and will be targeted at institutions. A more illiquid and concentrated African fund will be made available to Russian investors shortly.

Flying visit

Broby said Renaissance staff had recently taken 35 managers from multinational investment funds on a 10-day whistle-stop tour of six African countries featured in the fund. Managers have already identified 540 listed companies that are suitable for investing in. Nigeria is the fund's main focus with exposure potentially accounting for 50%, while Kenya and the Francophone countries will make up most of the remaining allocation.

"We are not replicating what Fidelity or Union Bank of Switzerland have done," comments Broby. "Russian investors are different and our clients will expect higher returns than 7% from such funds."

"Our managers are used to delivering in frontier markets, dealing with corruption and lots of paperwork," he adds.

Fund management licenses are being sought throughout the region so Renaissance can open offices for managers and a research team on the ground. The funds team are piggy-backing on the investment bank, which has done two public offerings in Africa in four months. Renaissance is forecasting a capital flight in the near future because of the flat market at home and the impending presidential elections next year.

The group have recently opened offices in Zurich, Dubai, Singapore and Hong Kong to service the desire of clients to diversify. Renaissance Investment Management currently has $4.5bn in assets under management.


Monday, 10 September 2007

The Guardian: View from Russia

The Guardian

September 6, 2007

By Jason Corcoran in Moscow

Public/private partnerships have become the great hope of the Russian government in the quest to regenerate the country's dilapidated Soviet-era infrastructure.

Investment in crumbling roads, railway, ports, utilities and municipal services, was a central theme of President Vladimir Putin's recent final state of the union address. Putin said public spending would not be the main source, but would act as a catalyst for private investment. "The state should put its shoulder to the wheel, in cases where the risk for private investors is too great."

Infrastructure investment has fallen short in recent years, despite growing oil revenues. The Kremlin is banking on private investors stumping up billions to finance 10 big projects, which have been seeded with money from the government's investment fund. According to investment bank Merrill Lynch, infrastructure spending in Russia will reach £90bn over the next three years.

Innokenty Ivanov, a senior lawyer at Freshfields Bruckhaus Deringer in Moscow, said a lot of the impetus for PPPs is coming from the regional and federal level level. "Putin has issued the clarion call but it's the regional governors, the minister for transport Igor Levitin and the minister of economic development and trade German Gref who have been hands on," said Ivanov, who is advising the federal government on PPPs.

The government is also discussing whether to set up a PPP unit to supervise the growing number of projects. For the first 10 infrastructure projects selected for tendering, the Ministry of Economic Trade and Development has set a target of £15bn for private money, a 20:1 ratio on the government's initial commitment of £750,000.

The £1.5bn western high-speed toll motorway encircling St Petersburg is to be the first project, with the winning consortium and the new law on concession agreements due to be announced this autumn. The eight-lane highway stretching over 33 miles, with 13 bridges and a viaduct, will take an estimated six years to construct.

Government financing is in place for further works in St Petersburg such as the Orlovsky tunnel under the Neva River, a high-speed elevated railway and £3.5bn toll road linking up with Moscow. Other major PPPs include a road link to the Moscow-Minsk highway, an oil-refinery complex in Tatarstan, an energy-industrial complex on the Angara river and reconstruction of sewerage plants in Rostov-na-Danu.

Read the full article in this month's Public


Monday, 3 September 2007

Lehman Hires Senior Staffers As Firm Returns to Russia

Wall Street Journal

September 2, 2007


Lehman Brothers Holdings Inc. has made two senior hires in Moscow as part of its plan to launch full investment-banking services in Russia and hire 60 staff by the end of the year.

The U.S. bank has recruited Stan Raskin, director of investment banking at Troika Dialog, as executive director. Mr. Raskin, who worked for Lehman in New York from 2000 to 2002 advising information-technology companies, will help
develop investment-banking services.

The bank also hired Irina Volkova, a vice president at Merrill Lynch & Co. in Russia, as chief administrative officer.

The two are the first senior appointments by Nicholas Jordan, who joined Lehman in April as vice chairman and head of the investment-banking
business for Russia after being wooed from Deutsche Bank with an annual package valued at more than $7 million.

Lehman, which had been serving its Russian clients from London since leaving Moscow after the 1998 financial crisis, moved into new offices near the British Embassy on Moscow's Savvinskaya embankment in July.

The bank is expected to shortly announce other new hires and plans to secure a Russian trading license.

Lehman's return to Moscow after nine years would spell the end of its M&A advisory
tie-up with Russian investment bank Renaissance Capital, according to people familiar with the matter. Lehman Brothers declined to comment.

From Financial News at www.efinancialnews.com.