Russia's Renaissance to sign deal with South Korea's Hanwha

Business New Europe

Jason Corcoran in Moscow

February 22, 2008


Russian investment bank Renaissance Capital is to sign a partnership agreement with South Korea's Hanwha Securities to explore ties in asset management and brokerage. A formal agreement between the two is expected to be signed at the end of February.

Renaissance already has investment banking joint ventures with the UK's Royal Bank of Scotland, and Australia's Macquarie, along with an informal mergers and acquisitions tie-up with US bank Lehman Brothers.

Stephen Jennings, Renaissance's founder, last year said the bank could only do a limited number of partnerships. "You can't do a lot of alliances. How many best friends can you have? You can only have a small number," he said.

However, Alexander Kotchoubey, managing director of Renaissance Investment Management, stressed it was the first such arrangement for the group in funds.

The two banks have agreed a memorandum of understanding to work together initially in asset management with a view to developing the relationship further in brokerage activities and investment banking.

"There is a revolution happening in retail capital. People are looking for substitute markets and the Koreans have relaxed their laws allowing investors to look abroad. They have already been investing in Chinese bonds and are now looking for other markets like Russia," Kotchoubey told bne.

The two banks will shortly launch a Russian mutual fund in South Korea and plan to develop hedge funds and wealth management services.

Hanwha, part of one the country's top-10 conglomerates Hanwha Group, was chosen as partner because it already has launched a fund investing in Kazakhstan. Hanwha also hopes to leverage Renaissance's strengths in the Russian market for its own ends. Renaissance is currently developing a full service investment bank located in Kazakhstan's financial capital Almaty.

"We are very bullish about the Central Asian marketplace as is Hanwha. Korean companies such as Samsung have car factories in Kazakhstan and are expanding in the region," Kotchoubey says. "At the moment, the relationship is about investment management but it will develop."

Top South Korean automaker Hyundai Motor is looking at setting up a plant in Uzbekistan. The world's fifth-largest car market already also announced in December it would begin work on a 100,000-unit plant costing $400m in St Petersburg within the year.

Other South Korean companies exploring expansion opportunities in Central Asia include telecommunication giants LG Telecom and SK Telecom, along with Daewoo.

As the largest shipbuilder in the world, Korea has also seen a rising number of orders from clients in the region.