Wall Street Journal Europe
April 28, 2009
By JASON CORCORAN
MOSCOW -- Nick Jordan, one of the highest-profile bankers in Russia, has lost out on a top job at his employer, Nomura Holdings, putting his future at the Japanese bank in doubt and possibly heralding the end for Moscow's best-paid foreign "rainmakers."
Mr. Jordan had been named in an internal memo last month as the future head of the combined Nomura-Lehman Brothers business in Russia and the Commonwealth of Independent States.
But now Maxim Seltzer, who joined Nomura in 2006 and was made general director of Nomura CIS in March 2007 when Nomura opened an office there, is getting the job, according to a Nomura spokesman.
It wasn't immediately clear what had prompted the rethink at the Japanese bank. People familiar with management's thinking said Mr. Jordan was felt to be much too expensive in the current climate. Also, he is London-based and travels to Moscow while Mr. Seltzer has always been based full-time in Moscow.
The American banker was hired two years ago by Lehman Brothers from Deutsche Bank to lead the U.S. bank's second foray into Russia. He had spent a decade at Deutsche Bank AG working on deals involving energy company Gazprom and other companies closely linked to the Kremlin.
Most of the team Mr. Jordan recruited over the past two years in Moscow have left or have been let go, according to people familiar with the situation. These include Peter Ghavami, who had been head of capital markets and who joined Standard Bank earlier this year.
Mr. Jordan declined to comment. Nomura said it "was committed" to Russia and the CIS and had "an active" mergers and acquisition and initial public offering pipeline.
Competition between the largest international and domestic banks to sign Russia's leading bankers had resulted in multi-million dollar guaranteed remuneration packages in recent years. But the slowdown in capital markets has forced banks with Russian business to cut their costs and salaries.
A second foreign rainmaker, Bob Foresman, is relocating with his family back to the U.S. and will commute to Moscow for 12 working days a month as deputy chairman of Renaissance Capital, part of Renaissance Group. A Renaissance Capital spokesman said Mr. Foresman had a young family and he wanted them to go to school in the U.S. and learn to play American sports.
Showing posts with label Lehman Brothers. Show all posts
Showing posts with label Lehman Brothers. Show all posts
Tuesday, 28 April 2009
Tuesday, 22 April 2008
Lehman launches second campaign in Russia
Wall Street Journal - Financial News
Jason Corcoran in Moscow
21 April 2008
Bank’s two most senior executives in the country tell Financial News why they are building their Moscow team
Nick Jordan
This August will mark 10 years since Russia defaulted on $40bn (€25bn) of treasury debt. The anniversary will coincide with Lehman Brothers moving into its new Moscow office, a decade after the US investment bank and other bulge bracket firms lost billions in the resulting financial meltdown.
olitical stability and a boom in capital markets have brought the banks scrambling back, but some remain sensitive about the events of 1998.
Lehman was hit badly by the financial crash although it has never disclosed its losses. The bank is believed to have recovered only a fraction of its shortfall by freezing the UK-based assets of two Russian banks after contending Inkombank and Uneximbank had defaulted on obligations.
The European management, led by Jeremy Isaacs, had to work hard to convince New York-based chairman and chief executive Richard Fuld to re-enter the market. Lehman’s two most senior executives in Russia, Peter Ghavami and Nick Jordan, said the move to set up a full service investment bank in Moscow was preceded by a robust discussion at the bank.
Ghavami, head of capital markets in Russia, said: “Any company going into Russia would have a debate about capital allocation and that is healthy. I would not describe those debates as being between individuals. It’s a case of where do you want to put your capital and the decision was made very strongly to go to Russia.”
Ghavami, who joined last year from UBS where he was global head of commodities, added: “We have committed to building a strong local presence. We have received a broker-dealer licence, we are moving into permanent office space and we are building teams of people who will be based here permanently.”
Lehman underlined its intentions for the Russian market last year by hiring Jordan from his position as co-head of Russian investment banking for Deutsche Bank in London. Jordan, one of the best-regarded bankers in the country, is partnering Ghavami to build Lehman’s Russian business. He spent 10 years at Deutsche, where he worked on deals involving energy company Gazprom and other companies closely linked to the Kremlin.
Jordan, whose brother Boris founded Russia’s Renaissance Capital with Stephen Jennings, said Lehman’s opening in Moscow had been prompted by its clients.
He said: “You have to be there at the same time your clients want to be there. Our global institutional client base, both public and private, necessitated our move into Russia and the corporate sector with its strategic interest in Russia’s business sector.”
Ghavami and Jordan said Lehman’s expansion into Russia reflected the bank’s European and Asian growth and moves into commodities and foreign exchange.
The pair are confident Lehman has entered the Russian market at the right time despite a drought in equity issuance during the first quarter and a slackening in Russian corporate borrowing as a result of the credit crisis.
Healthy mergers and acquisitions dealflow has helped fill the void. Data provider Thomson Financial estimated Russian M&A volume at $14.2bn in the first quarter, only 4% lower than a year ago.
The bank, which received its broking and dealing licence from the Federal Financial Markets Service in January, will move into new offices at Naberezhnaya Tower II in Moscow City, the capital’s emerging business district three kilometres west of the Kremlin. Ghavami will move to Moscow from London. Jordan, who is based in London for family reasons, spends about three weeks a month in Moscow.
The pair said they had had no difficulties finding staff in spite of a battle for talent in Moscow. Many of Lehman’s international rivals, such as Merrill Lynch, Goldman Sachs and Credit Suisse, are expanding their operations in Russia.
Ghavami said: “We don’t believe the competitive landscape is something to be afraid of. It’s a healthy indication that there is a lot of value being in Russia.”
Jordan’s contract at Deutsche Bank prevented him from hiring former colleagues for a period. That arrangement has expired and he has brought in Stan Raskin as head of investment banking and Oksana Buto as a director.
Irina Volkova has joined from Merrill Lynch as chief administrative officer and Burat Karimov has been hired from local bank Uralsib Financial as a director.
Nikolai Varma is the most recent hire, joining as an executive director in Lehman’s financial institutions group from Credit Suisse. Lehman last year recruited a research team to cover Russian equities from Moscow. Viktor Shvets was hired as managing director from New York-based Moon Capital Management, where he led telecommunications research, to run a team of three analysts in Moscow.
Pavel Mamai, formerly at Renaissance Capital, joined as a credit analyst, and Vladimir Zhukov arrived from local lender Alfa Bank to cover metals and mining stocks.
Lehman intends to phase out its M&A advisory tie-up with Renaissance Capital because the two have become competitors rather than joint venture partners. Under the arrangement, Lehman and Renaissance have completed several deals in the natural resources sector. Sources close to the banks said they might co-operate in a new format.
Jason Corcoran in Moscow
21 April 2008
Bank’s two most senior executives in the country tell Financial News why they are building their Moscow team
Nick Jordan
This August will mark 10 years since Russia defaulted on $40bn (€25bn) of treasury debt. The anniversary will coincide with Lehman Brothers moving into its new Moscow office, a decade after the US investment bank and other bulge bracket firms lost billions in the resulting financial meltdown.
olitical stability and a boom in capital markets have brought the banks scrambling back, but some remain sensitive about the events of 1998.
Lehman was hit badly by the financial crash although it has never disclosed its losses. The bank is believed to have recovered only a fraction of its shortfall by freezing the UK-based assets of two Russian banks after contending Inkombank and Uneximbank had defaulted on obligations.
The European management, led by Jeremy Isaacs, had to work hard to convince New York-based chairman and chief executive Richard Fuld to re-enter the market. Lehman’s two most senior executives in Russia, Peter Ghavami and Nick Jordan, said the move to set up a full service investment bank in Moscow was preceded by a robust discussion at the bank.
Ghavami, head of capital markets in Russia, said: “Any company going into Russia would have a debate about capital allocation and that is healthy. I would not describe those debates as being between individuals. It’s a case of where do you want to put your capital and the decision was made very strongly to go to Russia.”
Ghavami, who joined last year from UBS where he was global head of commodities, added: “We have committed to building a strong local presence. We have received a broker-dealer licence, we are moving into permanent office space and we are building teams of people who will be based here permanently.”
Lehman underlined its intentions for the Russian market last year by hiring Jordan from his position as co-head of Russian investment banking for Deutsche Bank in London. Jordan, one of the best-regarded bankers in the country, is partnering Ghavami to build Lehman’s Russian business. He spent 10 years at Deutsche, where he worked on deals involving energy company Gazprom and other companies closely linked to the Kremlin.
Jordan, whose brother Boris founded Russia’s Renaissance Capital with Stephen Jennings, said Lehman’s opening in Moscow had been prompted by its clients.
He said: “You have to be there at the same time your clients want to be there. Our global institutional client base, both public and private, necessitated our move into Russia and the corporate sector with its strategic interest in Russia’s business sector.”
Ghavami and Jordan said Lehman’s expansion into Russia reflected the bank’s European and Asian growth and moves into commodities and foreign exchange.
The pair are confident Lehman has entered the Russian market at the right time despite a drought in equity issuance during the first quarter and a slackening in Russian corporate borrowing as a result of the credit crisis.
Healthy mergers and acquisitions dealflow has helped fill the void. Data provider Thomson Financial estimated Russian M&A volume at $14.2bn in the first quarter, only 4% lower than a year ago.
The bank, which received its broking and dealing licence from the Federal Financial Markets Service in January, will move into new offices at Naberezhnaya Tower II in Moscow City, the capital’s emerging business district three kilometres west of the Kremlin. Ghavami will move to Moscow from London. Jordan, who is based in London for family reasons, spends about three weeks a month in Moscow.
The pair said they had had no difficulties finding staff in spite of a battle for talent in Moscow. Many of Lehman’s international rivals, such as Merrill Lynch, Goldman Sachs and Credit Suisse, are expanding their operations in Russia.
Ghavami said: “We don’t believe the competitive landscape is something to be afraid of. It’s a healthy indication that there is a lot of value being in Russia.”
Jordan’s contract at Deutsche Bank prevented him from hiring former colleagues for a period. That arrangement has expired and he has brought in Stan Raskin as head of investment banking and Oksana Buto as a director.
Irina Volkova has joined from Merrill Lynch as chief administrative officer and Burat Karimov has been hired from local bank Uralsib Financial as a director.
Nikolai Varma is the most recent hire, joining as an executive director in Lehman’s financial institutions group from Credit Suisse. Lehman last year recruited a research team to cover Russian equities from Moscow. Viktor Shvets was hired as managing director from New York-based Moon Capital Management, where he led telecommunications research, to run a team of three analysts in Moscow.
Pavel Mamai, formerly at Renaissance Capital, joined as a credit analyst, and Vladimir Zhukov arrived from local lender Alfa Bank to cover metals and mining stocks.
Lehman intends to phase out its M&A advisory tie-up with Renaissance Capital because the two have become competitors rather than joint venture partners. Under the arrangement, Lehman and Renaissance have completed several deals in the natural resources sector. Sources close to the banks said they might co-operate in a new format.
Monday, 21 April 2008
Lehman to end Russian joint venture
Financial News
Jason Corcoran in Moscow
21 April 2008
US investment bank Lehman Brothers is phasing out its M&A advisory joint venture with Russia’s Renaissance Capital as it builds its presence in Moscow. The move comes just weeks after bank Royal Bank of Scotland announced the end of its derivatives joint venture with the Russian group.
Lehman, which re-entered the Russian market last year, anticipates being up to scale by September when it moves into its new offices in the emerging business district of Moscow City.
A source close to the bank said: “The arrangement is being phased out. As we build out our own M&A capabilities in Russia, the need for that is diminished as we become more like competitors rather than joint venture partners.”
The tie-up had seen the two banks co-operate on a number of deals in the natural resources sector over the past few years.
Nick Jordan, who is leading the investment banking business for Lehman in Moscow, previously advised energy group Gazprom and other blue chips on some of their biggest acquisitions.
Renaissance founder Stephen Jennings last year said the arrival of Jordan from Deutsche Bank would not threaten its agreement with Lehman.
Renaissance was unavailable for comment.
Jason Corcoran in Moscow
21 April 2008
US investment bank Lehman Brothers is phasing out its M&A advisory joint venture with Russia’s Renaissance Capital as it builds its presence in Moscow. The move comes just weeks after bank Royal Bank of Scotland announced the end of its derivatives joint venture with the Russian group.
Lehman, which re-entered the Russian market last year, anticipates being up to scale by September when it moves into its new offices in the emerging business district of Moscow City.
A source close to the bank said: “The arrangement is being phased out. As we build out our own M&A capabilities in Russia, the need for that is diminished as we become more like competitors rather than joint venture partners.”
The tie-up had seen the two banks co-operate on a number of deals in the natural resources sector over the past few years.
Nick Jordan, who is leading the investment banking business for Lehman in Moscow, previously advised energy group Gazprom and other blue chips on some of their biggest acquisitions.
Renaissance founder Stephen Jennings last year said the arrival of Jordan from Deutsche Bank would not threaten its agreement with Lehman.
Renaissance was unavailable for comment.
Monday, 28 January 2008
Russian wealth manager head leaves Deutsche Bank
Financial News
Jason Corcoran in Moscow
28 January 2008
Claus Korner, head of Deutsche Bank’s wealth management business in Russia, has left for Icelandic banking group Glitnir.
Korner, head of Deutsche Bank’s private wealth management since 2004, has been working in Russia and eastern European private banking and asset management since 1992.
He was a pioneer at Deutsche in attracting clients worth more than $1bn and proving wealthy Russians are prepared to invest their money onshore. Private banking group UBS and Credit Suisse have followed in Deutsche’s wake and set up operations in Moscow.
Other senior Deutsche staff in Moscow have resigned in the past year as the market for top Moscow bankers has become more competitive.
Russian rainmaker Nick Jordan left for Lehman Brothers and his investment banking co-head Ilya Sherbovich is leaving soon to start a boutique.
Glitnir, which is setting up corporate finance, brokerage and asset management in Moscow, is recruiting eight sales and marketing staff to its wealth management team, in addition to its four advisers.
Erkin Nusurov, former managing director for investments at Austria’s Raiffeisen Asset Management, has also joined as chief investment officer.
Raimo Valo, head of investment management for Russia, said Glitnir’s threshold for wealth clients will be about a third of its rivals.
Glitnir last year acquired Finland’s FIM Asset Management, which has a record of investing in Russia since 1997.
The group last year launched three rouble-denominated mutual funds – FIM Russian Equities, FIM Russian Portfolio and FIM Russian Bonds – which closely match other funds that invest in Russia.
Glitnir’s large and small-cap Russian funds have more than €500m ($733.79m) under management. As the Nordic region’s third-largest broker, Glitnir manages more than €8.5bn in assets under management in 46 funds.
www.efinancialnews.com
Jason Corcoran in Moscow
28 January 2008
Claus Korner, head of Deutsche Bank’s wealth management business in Russia, has left for Icelandic banking group Glitnir.
Korner, head of Deutsche Bank’s private wealth management since 2004, has been working in Russia and eastern European private banking and asset management since 1992.
He was a pioneer at Deutsche in attracting clients worth more than $1bn and proving wealthy Russians are prepared to invest their money onshore. Private banking group UBS and Credit Suisse have followed in Deutsche’s wake and set up operations in Moscow.
Other senior Deutsche staff in Moscow have resigned in the past year as the market for top Moscow bankers has become more competitive.
Russian rainmaker Nick Jordan left for Lehman Brothers and his investment banking co-head Ilya Sherbovich is leaving soon to start a boutique.
Glitnir, which is setting up corporate finance, brokerage and asset management in Moscow, is recruiting eight sales and marketing staff to its wealth management team, in addition to its four advisers.
Erkin Nusurov, former managing director for investments at Austria’s Raiffeisen Asset Management, has also joined as chief investment officer.
Raimo Valo, head of investment management for Russia, said Glitnir’s threshold for wealth clients will be about a third of its rivals.
Glitnir last year acquired Finland’s FIM Asset Management, which has a record of investing in Russia since 1997.
The group last year launched three rouble-denominated mutual funds – FIM Russian Equities, FIM Russian Portfolio and FIM Russian Bonds – which closely match other funds that invest in Russia.
Glitnir’s large and small-cap Russian funds have more than €500m ($733.79m) under management. As the Nordic region’s third-largest broker, Glitnir manages more than €8.5bn in assets under management in 46 funds.
www.efinancialnews.com
Friday, 21 December 2007
RenCap to double staff in Africa and Asia
Financial News
Jason Corcoran in Moscow
21 Dec 2007
Emerging markets investment bank Renaissance Capital aims to double the headcount in its African and central Asian operations next year to 260 bankers.
Renaissance, which set up shop in Africa earlier last year, is recruiting an additional 100 bankers for its sub-Saharan hub in Nigeria's Lagos and its offices in the Kenyan capital Nairobi.
The bank is also establishing a full service investment bank in Kazakhstan's financial capital Almaty as a launchpad into other central Asian markets such as Uzbekistan. Staffing in Almaty will be doubled to 60.
Karl Franzmann, global head of recruitment at Renaissance, said the bank required investment bankers, equity research analysts and sales and traders for its new markets.
He said: "We are going to look at how the downturn will affect the bulge bracket banks. They have made commitments before to emerging markets and then pulled out. There are a lot of experienced expatriates working in New York and London and they might be looking at their options to return home in a few months time."
Renaissance will run a global advertising campaign next week in the Wall Street Journal and the Financial Times.
Franzmann said the bank's main Russian business would grow by 25% next year. "In Russia the growth will be spread across investment banking, sales and trading, derivatives and research."
Peter Vanhecke, recently hired from Dresdner Kleinwort has been appointed to head up Renaissance's bank in Ukraine.
Renaissance is also opening another sales and distribution hub in either Singapore or Hong and expanding its New York office.
A London-based headhunter said some bulge-bracket banks like Credit Suisse and Deutsche Bank had already ring-fenced their emerging market operations to protect them in the event of job losses due to the US sub-prime crisis.
He said: "Emerging market operations are usually where heads start rolling first. Banks that haven't suffered from the credit crunch can leverage the relative weakness of other banks to build their platforms."
Senior Moscow bankers suggested Lehman Brothers might be most vulnerable in Moscow to cuts. "They have struggled to gain scale and Dick Fuld isn't very keen on Russia anyway," said one.
Jason Corcoran in Moscow
21 Dec 2007
Emerging markets investment bank Renaissance Capital aims to double the headcount in its African and central Asian operations next year to 260 bankers.
Renaissance, which set up shop in Africa earlier last year, is recruiting an additional 100 bankers for its sub-Saharan hub in Nigeria's Lagos and its offices in the Kenyan capital Nairobi.
The bank is also establishing a full service investment bank in Kazakhstan's financial capital Almaty as a launchpad into other central Asian markets such as Uzbekistan. Staffing in Almaty will be doubled to 60.
Karl Franzmann, global head of recruitment at Renaissance, said the bank required investment bankers, equity research analysts and sales and traders for its new markets.
He said: "We are going to look at how the downturn will affect the bulge bracket banks. They have made commitments before to emerging markets and then pulled out. There are a lot of experienced expatriates working in New York and London and they might be looking at their options to return home in a few months time."
Renaissance will run a global advertising campaign next week in the Wall Street Journal and the Financial Times.
Franzmann said the bank's main Russian business would grow by 25% next year. "In Russia the growth will be spread across investment banking, sales and trading, derivatives and research."
Peter Vanhecke, recently hired from Dresdner Kleinwort has been appointed to head up Renaissance's bank in Ukraine.
Renaissance is also opening another sales and distribution hub in either Singapore or Hong and expanding its New York office.
A London-based headhunter said some bulge-bracket banks like Credit Suisse and Deutsche Bank had already ring-fenced their emerging market operations to protect them in the event of job losses due to the US sub-prime crisis.
He said: "Emerging market operations are usually where heads start rolling first. Banks that haven't suffered from the credit crunch can leverage the relative weakness of other banks to build their platforms."
Senior Moscow bankers suggested Lehman Brothers might be most vulnerable in Moscow to cuts. "They have struggled to gain scale and Dick Fuld isn't very keen on Russia anyway," said one.
Monday, 17 December 2007
Staff the winners as banks race for talent in Russia
OFinancial News
Jason Corcoran
17 December 2007
Political unrest continued to play havoc with deals
Charles Ryan, Deutsche Bank: A lot of our competitors are becoming increasingly desperate because they can’t achieve scale
A war for investment banking talent in Moscow during the past year led a senior executive at Deutsche Bank in Russia to compare the hiring spree with “a French farce”.
Competition between bulge brackets and domestic banks to sign Russia’s leading rainmakers resulted in remuneration packages comparable with those of footballers. Ed Kaufman is reputed to have been lured from UBS, where he was head of Russia, to become chief executive of investment banking at Alfa Bank by a guarantee of $20m (€13.6m) over two years while managing directors can net an average $3m pay packet, according to research by US publisher Forbes.
A boom in consumer spending, oil tilting towards $100 a barrel, record numbers of initial public offerings and a high growth rate spurred the scramble for talent.
Deutsche’s Russian operation, under chief executive Charles Ryan, has been hit by more defections than most. Its top Russian rainmaker Nick Jordan left for Lehman Brothers and his investment banking co-head Ilya Sherbovich is quitting next year to start a boutique. Several colleagues followed in their wake.
Ryan, whose contract expires next year, is nonplussed by the comings and goings. He said the bank continued to rank high in the capital markets league tables.
He said: “I have seen this movie before. Moscow is not a get-rich scheme because you need to have all the pieces of infrastructure in place, like we do. A lot of our competitors are becoming desperate because they can’t achieve scale. They are playing tennis without a net.”
Goldman Sachs, Lehman Brothers and Nomura returned to the country this year having fled after the 1998 financial crisis. The entrants have yet to make an impression on the league tables, where Deutsche, Merrill Lynch, ABN Amro, JP Morgan and Russia’s Renaissance Capital dominate. Russia’s much-anticipated IPO boom petered out in the autumn thanks to a combination of the credit crunch and investor apprehension ahead of the political elections.
Politicians and bullish analysts had forecast tens of IPOs for every quarter of the year, but the summer listings of state-controlled banks VTB and Sberbank – and their subsequent poor performance – sapped liquidity and investor appetite.
Chris Weafer, chief strategist at Uralsib, predicts total IPO business will reach $40bn in 2007, compared with $33bn last year. He said: “It wasn’t quite the big banner year many people expected.”
The US sub-prime problems sparked a sell-off in emerging markets and led to Russian IPOs being postponed during the final quarter.
Rusal, the world’s largest aluminium producer, pulled its $9bn London flotation in late September and was followed by several others, including Zenit Bank, Prosperity Capital and X5 Retail.
Igor Lojevsky, head of global banking and capital markets for Russia at Dresdner Kleinwort, said: “There was supposed to be a flood of institutions coming to the market this year but it didn’t really happen. Institutions have been distracted by the credit crunch, with many Russian companies putting off capital-raising plans since the end of September.”
The arrest of Deputy Finance Minister Sergei Storchak last month on charges of attempting to embezzle $43m raised the question of whether there is a serious rift between Kremlin factions about economic policy.
Storchak, who is allied to the Finance Minister Alexei Kudrin, is responsible for the country’s stabilisation fund and some think his arrest might be connected to the debate about how to invest oil reserves.
Kudrin supports an approach similar to that of Norway’s future generations fund, while it appears the Kremlin’s statists think all the money should be made available for spending on infrastructure and to develop strategic industries.
Weafer said: “I hope it’s not an attack on Kudrin. He and his allies are seen as a stabilising pro-market force. Any suggestion that he is under attack is bad news for the economy.”
The blurring of lines between politics and business was made explicit when two oil companies, Royal Dutch Shell and BP, ceded control of assets in Russia following pressure from the Kremlin. Shell was forced to cede control in Sakhalin-2, the world’s biggest liquefied natural gas project, to gas monopoly Gazprom, while TNK-BP had to sell its giant Kovykta gas field to Gazprom.
The case of beleaguered oil company RussNeft had echoes of Yukos, which ceased to exist from November following the carve-up of its assets during the summer and the continued incarceration of its former owner Mikhail Khodorkovsky in Siberia on tax evasion charges.
RussNeft’s owner Mikhail Gutseriyev fled the country for London, claiming he was the victim of political persecution. His private company, once the country’s seventh-largest petroleum producer, was saddled with back-tax charges and was seized by a court.
Oligarch Oleg Deripaska looks set to be the benefactor of Gutseriyev’s misfortune, having applied to the anti-monopoly service to acquire RussNeft’s assets.
Deripaska, whose estimated $20bn fortune includes Rusal, one of the world’s largest aluminium companies, is Russia’s leading dealmaker of the year.
Rusal was formed this year through a three-way merger of Russian Aluminum, Sual and the alumina assets of Swiss trader Glencore.
Deripaska also emerged as a 5% shareholder in US carmaker General Motors while his investment vehicle took a 20% stake in Canadian car manufacturer Magna and sizeable stakes in European construction companies Strabag and Hochtief.
Rusal looks set to acquire a blocking stake in Norilsk Nickel, the world’s largest nickel and palladium producer, in a deal that could create a Russian national champion in the metals sector with a market value of $100bn.
Deripaska, a former Soviet army sergeant with close ties to President Vladimir Putin, still appears to be serving his country. He alarmed investors this year when he declared himself as little more than a caretaker of assets for the state.
Jason Corcoran
17 December 2007
Political unrest continued to play havoc with deals
Charles Ryan, Deutsche Bank: A lot of our competitors are becoming increasingly desperate because they can’t achieve scale
A war for investment banking talent in Moscow during the past year led a senior executive at Deutsche Bank in Russia to compare the hiring spree with “a French farce”.
Competition between bulge brackets and domestic banks to sign Russia’s leading rainmakers resulted in remuneration packages comparable with those of footballers. Ed Kaufman is reputed to have been lured from UBS, where he was head of Russia, to become chief executive of investment banking at Alfa Bank by a guarantee of $20m (€13.6m) over two years while managing directors can net an average $3m pay packet, according to research by US publisher Forbes.
A boom in consumer spending, oil tilting towards $100 a barrel, record numbers of initial public offerings and a high growth rate spurred the scramble for talent.
Deutsche’s Russian operation, under chief executive Charles Ryan, has been hit by more defections than most. Its top Russian rainmaker Nick Jordan left for Lehman Brothers and his investment banking co-head Ilya Sherbovich is quitting next year to start a boutique. Several colleagues followed in their wake.
Ryan, whose contract expires next year, is nonplussed by the comings and goings. He said the bank continued to rank high in the capital markets league tables.
He said: “I have seen this movie before. Moscow is not a get-rich scheme because you need to have all the pieces of infrastructure in place, like we do. A lot of our competitors are becoming desperate because they can’t achieve scale. They are playing tennis without a net.”
Goldman Sachs, Lehman Brothers and Nomura returned to the country this year having fled after the 1998 financial crisis. The entrants have yet to make an impression on the league tables, where Deutsche, Merrill Lynch, ABN Amro, JP Morgan and Russia’s Renaissance Capital dominate. Russia’s much-anticipated IPO boom petered out in the autumn thanks to a combination of the credit crunch and investor apprehension ahead of the political elections.
Politicians and bullish analysts had forecast tens of IPOs for every quarter of the year, but the summer listings of state-controlled banks VTB and Sberbank – and their subsequent poor performance – sapped liquidity and investor appetite.
Chris Weafer, chief strategist at Uralsib, predicts total IPO business will reach $40bn in 2007, compared with $33bn last year. He said: “It wasn’t quite the big banner year many people expected.”
The US sub-prime problems sparked a sell-off in emerging markets and led to Russian IPOs being postponed during the final quarter.
Rusal, the world’s largest aluminium producer, pulled its $9bn London flotation in late September and was followed by several others, including Zenit Bank, Prosperity Capital and X5 Retail.
Igor Lojevsky, head of global banking and capital markets for Russia at Dresdner Kleinwort, said: “There was supposed to be a flood of institutions coming to the market this year but it didn’t really happen. Institutions have been distracted by the credit crunch, with many Russian companies putting off capital-raising plans since the end of September.”
The arrest of Deputy Finance Minister Sergei Storchak last month on charges of attempting to embezzle $43m raised the question of whether there is a serious rift between Kremlin factions about economic policy.
Storchak, who is allied to the Finance Minister Alexei Kudrin, is responsible for the country’s stabilisation fund and some think his arrest might be connected to the debate about how to invest oil reserves.
Kudrin supports an approach similar to that of Norway’s future generations fund, while it appears the Kremlin’s statists think all the money should be made available for spending on infrastructure and to develop strategic industries.
Weafer said: “I hope it’s not an attack on Kudrin. He and his allies are seen as a stabilising pro-market force. Any suggestion that he is under attack is bad news for the economy.”
The blurring of lines between politics and business was made explicit when two oil companies, Royal Dutch Shell and BP, ceded control of assets in Russia following pressure from the Kremlin. Shell was forced to cede control in Sakhalin-2, the world’s biggest liquefied natural gas project, to gas monopoly Gazprom, while TNK-BP had to sell its giant Kovykta gas field to Gazprom.
The case of beleaguered oil company RussNeft had echoes of Yukos, which ceased to exist from November following the carve-up of its assets during the summer and the continued incarceration of its former owner Mikhail Khodorkovsky in Siberia on tax evasion charges.
RussNeft’s owner Mikhail Gutseriyev fled the country for London, claiming he was the victim of political persecution. His private company, once the country’s seventh-largest petroleum producer, was saddled with back-tax charges and was seized by a court.
Oligarch Oleg Deripaska looks set to be the benefactor of Gutseriyev’s misfortune, having applied to the anti-monopoly service to acquire RussNeft’s assets.
Deripaska, whose estimated $20bn fortune includes Rusal, one of the world’s largest aluminium companies, is Russia’s leading dealmaker of the year.
Rusal was formed this year through a three-way merger of Russian Aluminum, Sual and the alumina assets of Swiss trader Glencore.
Deripaska also emerged as a 5% shareholder in US carmaker General Motors while his investment vehicle took a 20% stake in Canadian car manufacturer Magna and sizeable stakes in European construction companies Strabag and Hochtief.
Rusal looks set to acquire a blocking stake in Norilsk Nickel, the world’s largest nickel and palladium producer, in a deal that could create a Russian national champion in the metals sector with a market value of $100bn.
Deripaska, a former Soviet army sergeant with close ties to President Vladimir Putin, still appears to be serving his country. He alarmed investors this year when he declared himself as little more than a caretaker of assets for the state.
Sunday, 9 December 2007
Deutsche Bank retains lead in Russia's capital markets in 2007
Business New Europe
Jason Corcoran in Moscow
December 7, 2007
Deutsche Bank has retained its leading status in Russia's capital markets in 2007 despite being buffeted by the loss of key rainmakers and increased competition in Moscow from bulge-bracket banking rivals like Goldman Sachs and Lehman Brothers.
Deutsche, which has over 800 staff in Moscow, shed its UFG brand in October having completed the acquisition of the local brokerage late in 2006. The German bank's leading drummer-up of business in Russia, Nick Jordan, left for Lehman Brothers during the year and his investment banking co-head Ilya Sherbovich is winding down before he joins his own fledgling boutique United Capital Partners next year. Both Jordan and Sherbovich are bringing on board UFG staff to beef up their operations, but this has yet to affect Deutsche's standing in the capital markets tables.
According to data provider Thomson Financial, Deutsche is the leading equities bookrunner so far this year from its involvement in 10 issues worth over $5.3bn. Renaissance Capital is second from its share of 14 issues worth $4.3bn, while Citigroup completes the top trio with 4 issues worth $4bn. Deutsche, which has promoted internally to replace Jordan and Sherbovich, acted as joint global coordinator and bookrunner to VTB Bank in its $8bn IPO in May. It also organised offerings by the electricity suppliers OGK-2 and OGK-3 worth over $2bn and the recent flotation by real estate firm LSR worth $772m.
The head of Deutsche's Russian operations, Charlie Ryan, is nonplussed by Moscow's hiring war, which saw Ed Kaufman move from UBS to Alfa Bank for a guaranteed $15m over two years. "I have seen this movie before," he said earlier this year. "Moscow is not a get-rich scheme, because you need to have all the pieces of infrastructure in place like we do. A lot of our competitors are becoming increasingly desperate because they can't achieve scale. They are planning tennis without a net."
Returnees
This year saw the return to Moscow of Goldman, Lehman and Nomura, all of which fled in 1998 nursing losses from the financial crisis and the subsequent bond default. A boom in consumer spending, oil tilting towards $100 a barrel, a record number of IPOs and high economic growth are the main reasons drawing them back.
Goldman, the world's most profitable and respected investment bank, has made little inroads yet into the Russian market. The co-heads of its Russian operation both left for local firms during the year, with Gordon McCulloch heading for Renaissance and Magomed Galaev leaving to run an oligarch's investments. Goldman is fifth in Thomson's equity table, eighth in mergers and acquisitions, and 11th in debt capital markets; Lehman is nowhere.
Other Western banks already active in Russia, such as Merrill Lynch and JP Morgan, are desperately trying to build scale in an already saturated market. Merrill is fighting tooth and nail with JP Morgan for the top adviser crown on M&A involving Russian companies. Morgan Stanley is in third and Deutsche is fourth. Overall, Russian M&A activity has more than doubled this year to a record $127bn (€86.2bn), according to Thomson's figures.
JP Morgan, which was frustrated in its efforts to buy a local brokerage, snatched a team of 16 analysts, traders and institutional sales people from Russia's MDM Bank in July. Its Russian operation has maintained relationships with state-run entities and large corporations in Russia, acting as joint bookrunner last year on the $10.7bn flotation of Rosneft and was one of the two international placement agents for this year's $8.8bn listing by Sberbank.
Germany's Dresdner Kleinwort is trying to re-establish its leading position in equity capital market by hiring an additional 60 bankers. Dresdner has fallen out of the top 22 in Thomson's equity capital markets tables in the year to date after topping the poll in 2007 thanks to its joint-bookrunner mandates on the Rosneft and TMK IPOs. In M&A, Dresdner is 18th compared with its ninth position in 2006.
Dresdner has been rebuilding since the departure last year of Bob Foresman, head of the Moscow office, to Renaissance. Foresman subsequently hired six bankers from Dresdner. Matthias Warnig, former chairman of Dresdner's Russian business, also joined VTB's board ahead of its flotation although he remains involved on a part-time basis.
A surprise new entrant in the top five is St Petersburg's own KIT Finance, which worked on five deals worth over $19m. The up-and-coming bank has benefited from close links to a number of oligarchs and is plotting its own IPO for early next year.
In debt capital markets, the Western banks with big pockets retain a stranglehold at the top of the table. Dutch bank ABN AMRO, with 14 deals worth $3.7bn is just ahead of Citigroup while Deutsche Bank is third.
Jason Corcoran in Moscow
December 7, 2007
Deutsche Bank has retained its leading status in Russia's capital markets in 2007 despite being buffeted by the loss of key rainmakers and increased competition in Moscow from bulge-bracket banking rivals like Goldman Sachs and Lehman Brothers.
Deutsche, which has over 800 staff in Moscow, shed its UFG brand in October having completed the acquisition of the local brokerage late in 2006. The German bank's leading drummer-up of business in Russia, Nick Jordan, left for Lehman Brothers during the year and his investment banking co-head Ilya Sherbovich is winding down before he joins his own fledgling boutique United Capital Partners next year. Both Jordan and Sherbovich are bringing on board UFG staff to beef up their operations, but this has yet to affect Deutsche's standing in the capital markets tables.
According to data provider Thomson Financial, Deutsche is the leading equities bookrunner so far this year from its involvement in 10 issues worth over $5.3bn. Renaissance Capital is second from its share of 14 issues worth $4.3bn, while Citigroup completes the top trio with 4 issues worth $4bn. Deutsche, which has promoted internally to replace Jordan and Sherbovich, acted as joint global coordinator and bookrunner to VTB Bank in its $8bn IPO in May. It also organised offerings by the electricity suppliers OGK-2 and OGK-3 worth over $2bn and the recent flotation by real estate firm LSR worth $772m.
The head of Deutsche's Russian operations, Charlie Ryan, is nonplussed by Moscow's hiring war, which saw Ed Kaufman move from UBS to Alfa Bank for a guaranteed $15m over two years. "I have seen this movie before," he said earlier this year. "Moscow is not a get-rich scheme, because you need to have all the pieces of infrastructure in place like we do. A lot of our competitors are becoming increasingly desperate because they can't achieve scale. They are planning tennis without a net."
Returnees
This year saw the return to Moscow of Goldman, Lehman and Nomura, all of which fled in 1998 nursing losses from the financial crisis and the subsequent bond default. A boom in consumer spending, oil tilting towards $100 a barrel, a record number of IPOs and high economic growth are the main reasons drawing them back.
Goldman, the world's most profitable and respected investment bank, has made little inroads yet into the Russian market. The co-heads of its Russian operation both left for local firms during the year, with Gordon McCulloch heading for Renaissance and Magomed Galaev leaving to run an oligarch's investments. Goldman is fifth in Thomson's equity table, eighth in mergers and acquisitions, and 11th in debt capital markets; Lehman is nowhere.
Other Western banks already active in Russia, such as Merrill Lynch and JP Morgan, are desperately trying to build scale in an already saturated market. Merrill is fighting tooth and nail with JP Morgan for the top adviser crown on M&A involving Russian companies. Morgan Stanley is in third and Deutsche is fourth. Overall, Russian M&A activity has more than doubled this year to a record $127bn (€86.2bn), according to Thomson's figures.
JP Morgan, which was frustrated in its efforts to buy a local brokerage, snatched a team of 16 analysts, traders and institutional sales people from Russia's MDM Bank in July. Its Russian operation has maintained relationships with state-run entities and large corporations in Russia, acting as joint bookrunner last year on the $10.7bn flotation of Rosneft and was one of the two international placement agents for this year's $8.8bn listing by Sberbank.
Germany's Dresdner Kleinwort is trying to re-establish its leading position in equity capital market by hiring an additional 60 bankers. Dresdner has fallen out of the top 22 in Thomson's equity capital markets tables in the year to date after topping the poll in 2007 thanks to its joint-bookrunner mandates on the Rosneft and TMK IPOs. In M&A, Dresdner is 18th compared with its ninth position in 2006.
Dresdner has been rebuilding since the departure last year of Bob Foresman, head of the Moscow office, to Renaissance. Foresman subsequently hired six bankers from Dresdner. Matthias Warnig, former chairman of Dresdner's Russian business, also joined VTB's board ahead of its flotation although he remains involved on a part-time basis.
A surprise new entrant in the top five is St Petersburg's own KIT Finance, which worked on five deals worth over $19m. The up-and-coming bank has benefited from close links to a number of oligarchs and is plotting its own IPO for early next year.
In debt capital markets, the Western banks with big pockets retain a stranglehold at the top of the table. Dutch bank ABN AMRO, with 14 deals worth $3.7bn is just ahead of Citigroup while Deutsche Bank is third.
Monday, 3 September 2007
Lehman Hires Senior Staffers As Firm Returns to Russia
Wall Street Journal
September 2, 2007
By JASON CORCORAN in Moscow
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.
September 2, 2007
By JASON CORCORAN in Moscow
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.
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