Monday, 11 February 2008

Branson’s space race targets Troika clients

Financial News

Jason Corcoran in Moscow

11 February 2008

The strength of Troika Dialog Asset Management chairman Pavel Teplukhin’s client list has attracted the interest of a string of global entrepreneurs keen to do business with him, including Virgin Group chairman Sir Richard Branson.

The asset manager, the funds arm of the Russian investment bank Troika Dialog, which Teplukhin helped to establish, deals exclusively with Russia’s high net worth clients. Branson approached him at a Russian conference last month, seeking to lure them on to his Virgin Galactic space tourism programme.

Branson said: “I think we should meet and talk business. We have already signed up the first 100 passengers but Russia could be a great market for us.”

Teplukhin, one of the founders of Troika and president of asset management since 1991, can vouch for his clients’ wealth but not their love of space travel.

He said: “If you look at the Forbes rich list, I can tell you that 30% of the names are my clients. We only deal in the seriously rich. My revenues are more than the largest private bank in Monaco.”

The Russian edition of US magazine Forbes runs a special issue every year featuring Russia’s leading millionaires.

Troika’s asset management arm runs a full range of investment products, including sector funds, real estate investment trusts and hedge funds. It markets them to upper middle-class investors, whose portfolios average $25,000 (€17,063) and wealthy clients with average portfolios of $1.5m.

Overall funds under management stand at $5bn, although Teplukhin prefers to measure his business in terms of the fees it brings in. He said: “We earn higher fees than the other banks by focusing on higher margin business. We don’t count money deposits because it’s a low-margin business and we don’t do custody, which is outsourced to UBS at the cost of about three basis points.”

Teplukhin declined to say how much he charges clients, but industry sources suggested it was about three percentage points.

Teplukhin welcomed the arrival of wealth management banks UBS and Credit Suisse to Moscow, but added they would have to build brand awareness from scratch.

Both Swiss banks have set up onshore wealth management operations in Moscow in the past year to compete with Russian banks and Germany’s Deutsche Bank, which has £1bn (€1.3bn) in funds under management.

Teplukhin said investment houses were not willing to pay asset managers enough money. He said: “Talent is not that deep and juniors here with three to four years experience expect a seven-figure salary. There are one million millionaires in Russia and only 3,000 of those use private banking services."

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