Wall Street Journal Europe
By Jason Corcoran in Moscow
30 October 2008
Moscow -- THE LONDON Stock Exchange Group PLC has dropped a plan to open an office in Moscow after the financial crisis wiped out the prospects for Russian stock issuance for at least 12 months.
The decision to call off the Moscow office was taken after a group of companies in Russia and the Commonwealth of Independent States pulled stock listings amid a plunge in stock markets. Until recently, Russia had been seen as a possible source of growth for the larger exchange, which is facing competition from new rivals.
Jon Edwards, director of CIS and Central and Eastern Europe at the LSE, said the exchange had given the green light for the opening of a Moscow office before the country's economic crisis began in August. "We pulled plans to open in Moscow when we realized the severity of the crisis," he said.
Russian public-affairs and media company PBN said capital-raising activity in the CIS had slumped in the third quarter to half of the level seen last year, and is now at its lowest level since 2004.
So far this year, there have been seven initial public offerings by companies in Russia, Kazakhstan and the Ukraine, raising $1.7 billion, according to PBN. "To date we know of 43 companies that postponed or pulled their flotations this year," said Peter Necarsulmer, PBN's chief executive.
"We are very aggressively focusing in Russia's regions for companies ready to hit the ground running for capital raising, which we hope will open 12 months rather than 18 months as is expected," Mr. Edwards said at the sidelines of an investor conference. He said he had recently returned from company visits in metals-and-mining town Novosibirsk in Siberia and oil town Khanty-Mansiysk in Russia's Far East.
Like many other large exchanges, the LSE is dealing with the effects of the economic downturn and rising competition. Revenue at Europe's main incumbent stock exchanges have come under pressure in recent months from falling stock markets and the emergence of low-cost rivals, such as Turquoise and Nasdaq OMX Europe.
According to the World Federation of Exchanges, the total value of shares traded at the LSE fell more sharply than at any other large European stock market in the year to September, although the LSE's trading volumes rose faster than its peers.
Faced with low-cost rivals and dwindling volume, the LSE is likely to cut the fees it charges traders by 10% over the coming year to maintain competitiveness, said Credit Suisse analyst Rupak Ghose in a research note released Wednesday.
A spokeswoman for the LSE declined to comment on potential fee cuts and said that the WFE figures were of limited interest because different exchanges take report trading figures differently.
(Copyright (c) 2008, Dow Jones & Company, Inc.)
Showing posts with label Moscow. Show all posts
Showing posts with label Moscow. Show all posts
Thursday, 30 October 2008
Tuesday, 22 July 2008
Western Workers cash in on Russia
Guardian Weekly
Tuesday July 22nd 2008
Many professionals in the US and western Europe are considering a move to Russia, where high energy prices have sparked a boom in the economy and lucrative career opportunities abound. Jason Corcoran reports
Some foreign professionals can expect to double their incomes in Moscow. Photograph: Getty Images
As the US enters recession and many European economies attempt to cope with financial meltdown and a collapse in housing prices, Russia goes from strength to strength. A boom in consumer spending, oil tilting towards $140 a barrel, a high growth rate, coupled with success in football and the Eurovision song contest, have put the spotlight on Russia in 2008.
Western bankers in particular are charging to Moscow to cash in on a record number of lucrative takeover deals, as London and New York have increasingly become graveyards for the major financial institutions.
Jonathan Astbury, a managing director at the headhunter Sandton Group, which works with Goldman Sachs and Société Générale, said financiers are being incentivised to defect to Russia.
He said: "This is a slight premium compared to New York and London but the main benefit is that they are taxed at just 13% across the board, so they are significantly better off in real terms. Certainly, in career terms, we feel the continued malaise in western markets – notably the UK and North America – is making many bankers contemplate eastern Europe, Asia and the Middle East as the main viable career options in the short term."
Astbury has detected lots of movement by expatriates between places such as Hong Kong, Dubai, Mumbai and Moscow: "Once a person has made the emotional decision to try an overseas move, subsequent relocations then seem less daunting," he says. This was very much a characteristic of the 1980s and 90s when Hong Kong, Tokyo and Singapore saw a major influx of expatriates to staff roles, many of whom stayed to build long-term careers within the region.
Russian banks Renaissance Capital and Troika Dialog have doubled their headcounts over the past 18 months, often looking overseas for expertise, in a period when the world's biggest financial institutions have been forced to slash personnel in the wake of the credit crunch.
Andrew Keeley, head of financial institutions research at Troika, has spent six years in Moscow, and now divides his time between the Russian capital and London. "Bankers moving into Moscow from the west can expect to double their incomes because a major skills shortage still exists here," says Keeley, who comes from Kent.
The top bankers in Russia can command about $8m on two-year deals, according to recruiters. More junior staff involved in sales, trading research and IT earn similar rates to London but benefit from low taxes and higher bonuses.
High energy prices have ignited the economy and wages are rising across the board to keep pace with inflation. The boom has spread from oil and gas to the consumer sectors as Russia's rising middle class has developed a voracious appetite to buy cars, refurbish their apartments, eat out and go on holidays.
Western retailing giants such as Starbucks, Wal-Mart and Carrefour are waking up to the opportunity and have opened outlets or representative offices in Russia over the past year. Yet, Russia can't transform Moscow into a financial centre to rival New York or London overnight, nor can domestic retail chain X5 rapidly become a Tesco.
There is a skills deficit across the board in management, financial services, extraction industries, telecoms, IT – and that's where the western-educated and experienced middle managers come in.
Luc Jones, a partner at Antal International, a global recruitment firm active in Russia since 1993, places expats in retail banking, legal, auditing and financial services. Jones says: "Multinational firms have realised they are not going to make big money in the US and western Europe and we have seen a decoupling effect with markets like Russia, where they can still make big returns."
Adam Robinson recently quit his job as head of PR for the London Metal Exchange to join Moscow public affairs agency Mmd. "In hindsight, it was a good time to leave with the credit crunch really biting. I know companies at home are tightening their belts." Although he arrived three months ago, he says that he hasn't seen much of Russia's notorious bureaucracy apart from the three pages of forms he filled in at the dry-cleaners.
Recruiters say that being able to converse even a little in Russian is a big advantage socially and professionally but not essential for working in large corporations.
Russia's visa system has long been a regular feature of expat life. Annual trips to renew year-long multiple-entry visas usually required a welcome jaunt to a neighbouring capital such as Riga in Latvia.
However, the rules have already been tightened this year and those on business visas are not allowed to spend more than 90 days in Russia at any time without either a residence permit or a work permit. Foreign nationals on visa runs also have to return to their country of origin to renew.
Visas have been an issue for expats working at TNK-BP, the joint petroleum venture where BP is battling for control with four Russian billionaires. The Russian shareholders argue that management allows preferential treatment of foreign specialists while discriminating against Russian staff, who they allege have received inferior pay and conditions. Visas for 150 foreign staff are due to expire in July and have not yet been renewed. A further 148 international experts seconded to the venture from BP have been locked out of the office since March.
Between Moscow and Munich
New Yorker James Wilde is a career expat, having lived overseas in Austria, Germany, France and Brazil for the past 13 years. A director previously at BT Global Services in Munich, he was tempted to Moscow eight months ago by an offer to work as a financial controller at MTS, Russia's largest mobile operator.
The opportunity to work at a fast growing company, with operations as far afield as Uzbekistan and Armenia, was irresistible.
He says: "I also was excited about coming to Russia for the cultural experience. I had been to Russia several times before, to climb Mt Elbrus and heli-board in the Caucuses as well as visit friends in St Petersburg."
Wilde, 37, has immersed himself in Moscow life despite working up to 60 hours a week. A keen language student, he spends six hours a week learning Russian from scratch.
Moscow is easily the most expensive place Wilde has lived in for groceries and accommodation, but his remuneration package and the flat tax rate of 13% has more than compensated.
"The other thing I like about it is that if I need to return to my place in Munich I can do it relatively easily, whereas in Brazil it was always two days of travel," he adds.
"Some particular negatives are the nightmare traffic and the obsession with money. The positives are that the people are very motivated and funny, and once you know some locals well you find a warmth and depth of soul that is really fantastic."
http://www.guardianweekly.co.uk/?page=editorial&id=661&catID=15
Tuesday July 22nd 2008
Many professionals in the US and western Europe are considering a move to Russia, where high energy prices have sparked a boom in the economy and lucrative career opportunities abound. Jason Corcoran reports
Some foreign professionals can expect to double their incomes in Moscow. Photograph: Getty Images
As the US enters recession and many European economies attempt to cope with financial meltdown and a collapse in housing prices, Russia goes from strength to strength. A boom in consumer spending, oil tilting towards $140 a barrel, a high growth rate, coupled with success in football and the Eurovision song contest, have put the spotlight on Russia in 2008.
Western bankers in particular are charging to Moscow to cash in on a record number of lucrative takeover deals, as London and New York have increasingly become graveyards for the major financial institutions.
Jonathan Astbury, a managing director at the headhunter Sandton Group, which works with Goldman Sachs and Société Générale, said financiers are being incentivised to defect to Russia.
He said: "This is a slight premium compared to New York and London but the main benefit is that they are taxed at just 13% across the board, so they are significantly better off in real terms. Certainly, in career terms, we feel the continued malaise in western markets – notably the UK and North America – is making many bankers contemplate eastern Europe, Asia and the Middle East as the main viable career options in the short term."
Astbury has detected lots of movement by expatriates between places such as Hong Kong, Dubai, Mumbai and Moscow: "Once a person has made the emotional decision to try an overseas move, subsequent relocations then seem less daunting," he says. This was very much a characteristic of the 1980s and 90s when Hong Kong, Tokyo and Singapore saw a major influx of expatriates to staff roles, many of whom stayed to build long-term careers within the region.
Russian banks Renaissance Capital and Troika Dialog have doubled their headcounts over the past 18 months, often looking overseas for expertise, in a period when the world's biggest financial institutions have been forced to slash personnel in the wake of the credit crunch.
Andrew Keeley, head of financial institutions research at Troika, has spent six years in Moscow, and now divides his time between the Russian capital and London. "Bankers moving into Moscow from the west can expect to double their incomes because a major skills shortage still exists here," says Keeley, who comes from Kent.
The top bankers in Russia can command about $8m on two-year deals, according to recruiters. More junior staff involved in sales, trading research and IT earn similar rates to London but benefit from low taxes and higher bonuses.
High energy prices have ignited the economy and wages are rising across the board to keep pace with inflation. The boom has spread from oil and gas to the consumer sectors as Russia's rising middle class has developed a voracious appetite to buy cars, refurbish their apartments, eat out and go on holidays.
Western retailing giants such as Starbucks, Wal-Mart and Carrefour are waking up to the opportunity and have opened outlets or representative offices in Russia over the past year. Yet, Russia can't transform Moscow into a financial centre to rival New York or London overnight, nor can domestic retail chain X5 rapidly become a Tesco.
There is a skills deficit across the board in management, financial services, extraction industries, telecoms, IT – and that's where the western-educated and experienced middle managers come in.
Luc Jones, a partner at Antal International, a global recruitment firm active in Russia since 1993, places expats in retail banking, legal, auditing and financial services. Jones says: "Multinational firms have realised they are not going to make big money in the US and western Europe and we have seen a decoupling effect with markets like Russia, where they can still make big returns."
Adam Robinson recently quit his job as head of PR for the London Metal Exchange to join Moscow public affairs agency Mmd. "In hindsight, it was a good time to leave with the credit crunch really biting. I know companies at home are tightening their belts." Although he arrived three months ago, he says that he hasn't seen much of Russia's notorious bureaucracy apart from the three pages of forms he filled in at the dry-cleaners.
Recruiters say that being able to converse even a little in Russian is a big advantage socially and professionally but not essential for working in large corporations.
Russia's visa system has long been a regular feature of expat life. Annual trips to renew year-long multiple-entry visas usually required a welcome jaunt to a neighbouring capital such as Riga in Latvia.
However, the rules have already been tightened this year and those on business visas are not allowed to spend more than 90 days in Russia at any time without either a residence permit or a work permit. Foreign nationals on visa runs also have to return to their country of origin to renew.
Visas have been an issue for expats working at TNK-BP, the joint petroleum venture where BP is battling for control with four Russian billionaires. The Russian shareholders argue that management allows preferential treatment of foreign specialists while discriminating against Russian staff, who they allege have received inferior pay and conditions. Visas for 150 foreign staff are due to expire in July and have not yet been renewed. A further 148 international experts seconded to the venture from BP have been locked out of the office since March.
Between Moscow and Munich
New Yorker James Wilde is a career expat, having lived overseas in Austria, Germany, France and Brazil for the past 13 years. A director previously at BT Global Services in Munich, he was tempted to Moscow eight months ago by an offer to work as a financial controller at MTS, Russia's largest mobile operator.
The opportunity to work at a fast growing company, with operations as far afield as Uzbekistan and Armenia, was irresistible.
He says: "I also was excited about coming to Russia for the cultural experience. I had been to Russia several times before, to climb Mt Elbrus and heli-board in the Caucuses as well as visit friends in St Petersburg."
Wilde, 37, has immersed himself in Moscow life despite working up to 60 hours a week. A keen language student, he spends six hours a week learning Russian from scratch.
Moscow is easily the most expensive place Wilde has lived in for groceries and accommodation, but his remuneration package and the flat tax rate of 13% has more than compensated.
"The other thing I like about it is that if I need to return to my place in Munich I can do it relatively easily, whereas in Brazil it was always two days of travel," he adds.
"Some particular negatives are the nightmare traffic and the obsession with money. The positives are that the people are very motivated and funny, and once you know some locals well you find a warmth and depth of soul that is really fantastic."
http://www.guardianweekly.co.uk/?page=editorial&id=661&catID=15
Tuesday, 18 March 2008
Polar explorers in Ukraine
Business New Europe
Jason Corcoran in Moscow
March 18, 2008
UK-listed investment group Polar Capital is shutting its Moscow office in March after deciding to relocate its Eastern European operations to the Ukrainian capital Kyiv, citing a lack of quality deals in Russia and the growing attractiveness of Ukraine's economy.
"Russia is entering a period of sub-par returns compared to historical margins and some of the value had disappeared," Anton Khmelnitski, Polar's Moscow-based director, told bne. "Ukraine is insulated from the credit fallout and there's no downside to its top-five stocks, which we won't be able to short. The underlining reason is that we simply need to be closer to our investments."
Polar, which runs traditional and hedge funds, has cut the Russian exposure of its $220m Elbrus fund to 15% from 70% six months ago, and has sold down its holdings in blue-chips such as Russia's electricity monopoly UES and Golden Telecom. "There's a lot of good stuff still in Russia, but we are a boutique and we have more room to manoeuvre in smaller countries like Ukraine, which is about five years behind Russia," Khmelnitski says.
Contrarians
Polar's view on Russian stocks is at odds with Moscow's analyst community, who feel there could be 60% upside this year when the current sell-off ends. Russia's RTS index is down around 13% from the record high hit on December 12, after falling by as much as 20%. "A 20% fall from the high is regarded as a bear market for equities and, historically, in global markets it is a level when buying resumes," says Chris Weafer, chief strategist at Moscow's UralSib.
However, Khmelnitski believes that Ukraine will outpace Russia or any other place in a bull market and during a global slowdown because it's "cut off from the international capital markets." Ukraine's main stock exchange, the PFTS, grew last year 135.4% and is down by about 10% from the start of this year.
"The investment banks are all wrong because they are driven by other considerations. Just ask any banks in Europe which market has received most bank M&A activity, its Ukraine," explains Khmelnitski. "The Russian top-down situation qualifies best, as I often say, as a macro-trap with little value bottom up. See the performance of IPOs - excess liquidity will fall to 15% and eventually to zero."
Khmelnitski joined Polar Capital in April 2006 from Kazimir Partners, which was previously known as Brunswick Asset Management. He spent three years at Kazimir as head of equities. Prior to Brunswick, Khmelnitski was at Swiss group Pictet Asset Management in London where he spent almost six years managing the Eastern European Trust, a $100m exchange-listed company, which collected a number of awards for its performance and investment style. At the same time, he was also responsible for $500m of equity investments in Emerging Europe and Pictet's global emerging market oil and gas sector. Khmelnitski was born in Moscow, but grew up and received his education in Switzerland. A cerebral and quietly spoken man, he holds a Certificate in Financial Engineering from the FAME Foundation.
Khmelnitski says Polar will launch a new Ukrainian fund to invest $500m in public and private companies at early stages and those launching IPOs. Four analysts are to be hired, in addition to the two fund managers transferring from Moscow. Polar has already taken stakes in Ukrainian insurance company Oranta and locally listed property developer Dragon Ukrainian Properties and Development fund. The fund also made money through a series of pre-flotation Ukrainian investments, taking stakes in companies shortly before they listed.
The new Kyiv operation will primarily focus on property, domestic food, pharmaceuticals, high-tech firms and insurance companies. "The property market is at the beginning of its cycle and there are a lot of obvious opportunities in food, consumer goods and the beverage market," says Khmelnitski. "Accession to the WTO is a milestone event and will be key to this economy. "
Polar joins Sweden's East Capital as one of the few foreign investors to set up in Ukraine. East Capital's Bering Ukraine fund has grown to $304.68m and is up 180% since its inception. Investment banks are also being drawn to one of the best performing stock exchanges in the world last year. Credit Suisse opened a representative office in April, while Russia's Renaissance Capital has a full-service operation, competing with domestic market leaders Dragon Capital and Concorde. In November, Deutsche Bank said it was going to open an affiliated branch in Ukraine when the country joins the World Trade Organization.
www.businessneweurope.eu
Jason Corcoran in Moscow
March 18, 2008
UK-listed investment group Polar Capital is shutting its Moscow office in March after deciding to relocate its Eastern European operations to the Ukrainian capital Kyiv, citing a lack of quality deals in Russia and the growing attractiveness of Ukraine's economy.
"Russia is entering a period of sub-par returns compared to historical margins and some of the value had disappeared," Anton Khmelnitski, Polar's Moscow-based director, told bne. "Ukraine is insulated from the credit fallout and there's no downside to its top-five stocks, which we won't be able to short. The underlining reason is that we simply need to be closer to our investments."
Polar, which runs traditional and hedge funds, has cut the Russian exposure of its $220m Elbrus fund to 15% from 70% six months ago, and has sold down its holdings in blue-chips such as Russia's electricity monopoly UES and Golden Telecom. "There's a lot of good stuff still in Russia, but we are a boutique and we have more room to manoeuvre in smaller countries like Ukraine, which is about five years behind Russia," Khmelnitski says.
Contrarians
Polar's view on Russian stocks is at odds with Moscow's analyst community, who feel there could be 60% upside this year when the current sell-off ends. Russia's RTS index is down around 13% from the record high hit on December 12, after falling by as much as 20%. "A 20% fall from the high is regarded as a bear market for equities and, historically, in global markets it is a level when buying resumes," says Chris Weafer, chief strategist at Moscow's UralSib.
However, Khmelnitski believes that Ukraine will outpace Russia or any other place in a bull market and during a global slowdown because it's "cut off from the international capital markets." Ukraine's main stock exchange, the PFTS, grew last year 135.4% and is down by about 10% from the start of this year.
"The investment banks are all wrong because they are driven by other considerations. Just ask any banks in Europe which market has received most bank M&A activity, its Ukraine," explains Khmelnitski. "The Russian top-down situation qualifies best, as I often say, as a macro-trap with little value bottom up. See the performance of IPOs - excess liquidity will fall to 15% and eventually to zero."
Khmelnitski joined Polar Capital in April 2006 from Kazimir Partners, which was previously known as Brunswick Asset Management. He spent three years at Kazimir as head of equities. Prior to Brunswick, Khmelnitski was at Swiss group Pictet Asset Management in London where he spent almost six years managing the Eastern European Trust, a $100m exchange-listed company, which collected a number of awards for its performance and investment style. At the same time, he was also responsible for $500m of equity investments in Emerging Europe and Pictet's global emerging market oil and gas sector. Khmelnitski was born in Moscow, but grew up and received his education in Switzerland. A cerebral and quietly spoken man, he holds a Certificate in Financial Engineering from the FAME Foundation.
Khmelnitski says Polar will launch a new Ukrainian fund to invest $500m in public and private companies at early stages and those launching IPOs. Four analysts are to be hired, in addition to the two fund managers transferring from Moscow. Polar has already taken stakes in Ukrainian insurance company Oranta and locally listed property developer Dragon Ukrainian Properties and Development fund. The fund also made money through a series of pre-flotation Ukrainian investments, taking stakes in companies shortly before they listed.
The new Kyiv operation will primarily focus on property, domestic food, pharmaceuticals, high-tech firms and insurance companies. "The property market is at the beginning of its cycle and there are a lot of obvious opportunities in food, consumer goods and the beverage market," says Khmelnitski. "Accession to the WTO is a milestone event and will be key to this economy. "
Polar joins Sweden's East Capital as one of the few foreign investors to set up in Ukraine. East Capital's Bering Ukraine fund has grown to $304.68m and is up 180% since its inception. Investment banks are also being drawn to one of the best performing stock exchanges in the world last year. Credit Suisse opened a representative office in April, while Russia's Renaissance Capital has a full-service operation, competing with domestic market leaders Dragon Capital and Concorde. In November, Deutsche Bank said it was going to open an affiliated branch in Ukraine when the country joins the World Trade Organization.
www.businessneweurope.eu
Monday, 3 March 2008
Poster power looms large in Putin’s Russia
Financial News
By Jason Corcoran
03 March 2008
Letter from Moscow
A massive billboard featuring President Vladimir Putin walking next to a grinning Dmitry Medvedev looms large on the plaza leading to Red Square.
The words underneath the image of the outgoing President and his hand-picked successor read: “Together we will win.”
Yesterday’s presidential election wasn’t a question of if President Putin’s protégé would win, but by how much.
A carefully choreographed campaign and a near monopoly by the Kremlin ruling party of television and outdoor advertising almost guarantees Medvedev will be confirmed as the next President of Russia this week.
The image of Medvedev and Putin adorning the scaffolding of the city’s forthcoming Four Seasons Hotel had replaced a Rolex ad featuring tennis player Marat Safin in action.
A Moscow advertising source claimed officials from Putin’s United Russia party had secured billboard space for the elections in locations around the city at well below market rates.
Advertising has become big business in a city where designer brands have become important status symbols for nouveau riche Russians and the wannabes.
Companies spent a record 123bn roubles on advertising in Russia in the first nine months of last year, 24% higher than in the same period last year, according Russia’s Association of Communication Agencies.
Russia’s biggest player in billboard advertising is News Outdoor Group.
Its parent said last year it might sell the company, which owns more than 50,000 ad displays on billboards and bus shelters throughout Russia and the other Commonwealth of Independent States countries. Goldman Sachs has been retained to look at “strategic options”, which could also include attracting private equity partners.
The Moscow City Government claimed the company owed about $15.5m in unpaid fees for advertising space. It said the company has unjustly claimed discounts of up to 90%.
News Outdoor denied an inspection by ministry officials was related to the payment demands and assured customers and partners the incident would have no impact on its work.
Gallery Group, Russia’s second-largest operator recently acquired small operator Gorod Media and is plotting an initial public offering to fund more acquisitions and to challenge News Outdoor’s position.
While other forms of advertising on television and online are growing, the outdoor market in Moscow seems to be reaching saturation point.
Pressure on the industry is due to increase following the Government’s announcement it will create three advertising-free zones by the end of year.
The first zone being proposed is the area around the Kremlin’s embankments and the nearby Cathedral of Christ the Saviour.
Other zones concern the space surrounding the city’s Novodevichy Convent and Kolomenskoye Estate.
This move will require the demolition of thousands of advertising hoardings, which generate their owners an estimated $15m a year.
The operators generally have five-year contracts to operate the billboards and are expected to receive some form of compensation.
It is not yet clear whether the Moscow authorities will preclude Government-sponsored advertising in these zones. Some of the most pervasive advertising over the past few months has been for “Putin’s Plan”, “Medvedev’s Course” and, last summer, for VTB’s “People’s IPO”.
By Jason Corcoran
03 March 2008
Letter from Moscow
A massive billboard featuring President Vladimir Putin walking next to a grinning Dmitry Medvedev looms large on the plaza leading to Red Square.
The words underneath the image of the outgoing President and his hand-picked successor read: “Together we will win.”
Yesterday’s presidential election wasn’t a question of if President Putin’s protégé would win, but by how much.
A carefully choreographed campaign and a near monopoly by the Kremlin ruling party of television and outdoor advertising almost guarantees Medvedev will be confirmed as the next President of Russia this week.
The image of Medvedev and Putin adorning the scaffolding of the city’s forthcoming Four Seasons Hotel had replaced a Rolex ad featuring tennis player Marat Safin in action.
A Moscow advertising source claimed officials from Putin’s United Russia party had secured billboard space for the elections in locations around the city at well below market rates.
Advertising has become big business in a city where designer brands have become important status symbols for nouveau riche Russians and the wannabes.
Companies spent a record 123bn roubles on advertising in Russia in the first nine months of last year, 24% higher than in the same period last year, according Russia’s Association of Communication Agencies.
Russia’s biggest player in billboard advertising is News Outdoor Group.
Its parent said last year it might sell the company, which owns more than 50,000 ad displays on billboards and bus shelters throughout Russia and the other Commonwealth of Independent States countries. Goldman Sachs has been retained to look at “strategic options”, which could also include attracting private equity partners.
The Moscow City Government claimed the company owed about $15.5m in unpaid fees for advertising space. It said the company has unjustly claimed discounts of up to 90%.
News Outdoor denied an inspection by ministry officials was related to the payment demands and assured customers and partners the incident would have no impact on its work.
Gallery Group, Russia’s second-largest operator recently acquired small operator Gorod Media and is plotting an initial public offering to fund more acquisitions and to challenge News Outdoor’s position.
While other forms of advertising on television and online are growing, the outdoor market in Moscow seems to be reaching saturation point.
Pressure on the industry is due to increase following the Government’s announcement it will create three advertising-free zones by the end of year.
The first zone being proposed is the area around the Kremlin’s embankments and the nearby Cathedral of Christ the Saviour.
Other zones concern the space surrounding the city’s Novodevichy Convent and Kolomenskoye Estate.
This move will require the demolition of thousands of advertising hoardings, which generate their owners an estimated $15m a year.
The operators generally have five-year contracts to operate the billboards and are expected to receive some form of compensation.
It is not yet clear whether the Moscow authorities will preclude Government-sponsored advertising in these zones. Some of the most pervasive advertising over the past few months has been for “Putin’s Plan”, “Medvedev’s Course” and, last summer, for VTB’s “People’s IPO”.
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.
Monday, 15 October 2007
Daiwa opens for business in Russia
Financial News
Jason Corcoran in Moscow
15 October 2007
Japanese investment bank Daiwa Securities SMBC has appointed five staff to its Moscow operation, which launched last week.
The Russian representative office, which is supported by the bank’s European subsidiary in London, is headed by Yasuhiro Ota.
A Russian speaker, Ota was seconded from Daiwa’s Tokyo business, which he joined in 1987.
New Zealander Matthew Parker, a Daiwa director in London, has been named head of business development. Russians Mikhail Kharlamov, Vladimir Boyko and Katerina Zasetskaya join as business development manager, analyst and office manager, respectively.
Daiwa, Japan’s leading initial public offering bookrunner, will focus on servicing Japanese clients working in Russia and support the London team on Russian business in equity and debt underwriting, corporate finance advisory work, and mergers and acquisitions.
Japanese rival Nomura reopened its Moscow office in May, nine years after pulling out of Russia in the wake of the 1998 financial crisis, when it lost $600m (€423m).
Japanese investment banks Mizuho Corporate Bank and Mitsubishi UFG are also plotting a push into the increasingly crowded Russian market. Last week, the Bank of Cyprus opened its first Moscow branch, targeting the corporate market. The group will seek to take advantage of the fact that Cyprus was the biggest source of foreign direct investment into Russia last year, with a 22.6% share.
Jason Corcoran in Moscow
15 October 2007
Japanese investment bank Daiwa Securities SMBC has appointed five staff to its Moscow operation, which launched last week.
The Russian representative office, which is supported by the bank’s European subsidiary in London, is headed by Yasuhiro Ota.
A Russian speaker, Ota was seconded from Daiwa’s Tokyo business, which he joined in 1987.
New Zealander Matthew Parker, a Daiwa director in London, has been named head of business development. Russians Mikhail Kharlamov, Vladimir Boyko and Katerina Zasetskaya join as business development manager, analyst and office manager, respectively.
Daiwa, Japan’s leading initial public offering bookrunner, will focus on servicing Japanese clients working in Russia and support the London team on Russian business in equity and debt underwriting, corporate finance advisory work, and mergers and acquisitions.
Japanese rival Nomura reopened its Moscow office in May, nine years after pulling out of Russia in the wake of the 1998 financial crisis, when it lost $600m (€423m).
Japanese investment banks Mizuho Corporate Bank and Mitsubishi UFG are also plotting a push into the increasingly crowded Russian market. Last week, the Bank of Cyprus opened its first Moscow branch, targeting the corporate market. The group will seek to take advantage of the fact that Cyprus was the biggest source of foreign direct investment into Russia last year, with a 22.6% share.
Tuesday, 2 October 2007
Russian airline unveils Moscow to Dublin route
Irish Independent
Friday September 28 2007
Jason Corcoran in Moscow
RUSSIAN airline S7 is to launch a route from Moscow to Dublin from April next year in response to growing demand from tourists and businessmen in both countries.
The airline, formerly Siberian Airlines, will fly three times a week from Moscow's Domodevo Airport to Dublin Airport.
Economy fares will be pitched at about €250 return plus taxes, while business class passengers will be charged €1,000 for the four-hour flight.
Dimitry Chukseyev, S7 corporate communications manager in Moscow, said their research indicated the service could initially attract a 70pc load factor on their 170-seater Airbus 319.
He said: "It's an obvious gap in the market because no one else is flying direct between the two cities. Russians are travelling everywhere throughout Europe after decades of having to stay at home. Their incomes have shot up and they want to see the green grass and taste the real Guinness.
"Irish businessmen in Moscow are grateful because they won't have to face hours waiting in Heathrow for a connection home any more."
A Russian-Irish airline Skynet was set up in 2001 to fly from Dublin to Moscow via Amsterdam. The service was under a code-sharing agreement with Russian state airline Aeroflot, but trading was suspended due to financial difficulties.
S7, Russia 's second largest airline in terms of passenger numbers, has grown from a regional to a federal air carrier, serving 150 domestic destinations and a growing list of international airports. The Russian state owns a 25pc stake.
The airline is believed to be in the early stages of talks with Aer Lingus about a possible partnership whereby their passengers could connect to US routes cheaply.
www.independent.ie
Friday September 28 2007
Jason Corcoran in Moscow
RUSSIAN airline S7 is to launch a route from Moscow to Dublin from April next year in response to growing demand from tourists and businessmen in both countries.
The airline, formerly Siberian Airlines, will fly three times a week from Moscow's Domodevo Airport to Dublin Airport.
Economy fares will be pitched at about €250 return plus taxes, while business class passengers will be charged €1,000 for the four-hour flight.
Dimitry Chukseyev, S7 corporate communications manager in Moscow, said their research indicated the service could initially attract a 70pc load factor on their 170-seater Airbus 319.
He said: "It's an obvious gap in the market because no one else is flying direct between the two cities. Russians are travelling everywhere throughout Europe after decades of having to stay at home. Their incomes have shot up and they want to see the green grass and taste the real Guinness.
"Irish businessmen in Moscow are grateful because they won't have to face hours waiting in Heathrow for a connection home any more."
A Russian-Irish airline Skynet was set up in 2001 to fly from Dublin to Moscow via Amsterdam. The service was under a code-sharing agreement with Russian state airline Aeroflot, but trading was suspended due to financial difficulties.
S7, Russia 's second largest airline in terms of passenger numbers, has grown from a regional to a federal air carrier, serving 150 domestic destinations and a growing list of international airports. The Russian state owns a 25pc stake.
The airline is believed to be in the early stages of talks with Aer Lingus about a possible partnership whereby their passengers could connect to US routes cheaply.
www.independent.ie
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.
Sunday, 5 August 2007
AC Milan's Gattuso tackled on Red Square
AC Milan's Rino Gattuso and a contingent of his AC Milan team mates popped out of the National hotel to take a constitutional in Red Square ahead of their appearance in the Russian Railways Cup.
Gattuso, know as the Snarler in Seria A for his attentive tackling style, was the picture of politness and patience despite being pestered for dozens of photograhs and autographs by mainly Italian tourists. Milan later losxt to PSV 3-4 on penalties with many of their leading strikers left out of the starting eleven.
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