Fresh fundraising signals hope for Russia

Private Equity News

Jason Corcoran in Moscow
09 September 2009

Moscow-based private equity start-up Quadro Capital Partners has so far raised $200m (€139m) for its first fund amid signs that the moribund fundraising market in Russia is recovering.

Quadro was formed in April by Giedrius Pukas, the former managing director of Troika Capital Partners who quit the alternative asset manager subsidiary after a dispute over the running of the business with Ruben Vardanian, the majority owner of parent investment bank Troika Dialog.

Pukas, who has been joined at Quadro by former Troika Capital directors Vladimir Kozlov and Nikolay Sergeev, said: “We tried to buy the business from Reuben but he wouldn’t let us so we set up Quadro on our own. We have so far raised $200m (€138m) and we have a target of $350m.”

The fund, which includes several investors in Troika’s private equity funds, will invest in distressed debt and across the consumer, lifestyle and finance sectors.

Quadro joins a host of other funds raising private equity funds in the country. Russia Partners has recently raised an $800m fund while new player PPF Partners announced in June it had raised €615m ($891m) to invest in assets in central and eastern Europe, with Russia the key market.

UFG and Delta, which are closing in on final merger talks, are both currently trying to raise funds. Many of the commitments made by investors to UFG’s Private Equity Fund 11 were generated by Boris Fedorov, the firm’s founder who died late last year. A source close to the firm said some investors had withdrawn since Fedorov’s death.

Aim-listed Aurora Investment Advisors has recently raised £50m for its second fund which will be primarily used to reinvest in its current investments.

James Cook, joint founder of Aurora, believes a demand for private equity financing will return as companies who survived the crisis seek fresh capital to grow.

He said: “We are seeing heavily reduced valuations which will likely yield high returns for private equity capital invested in 2009/10. As companies continue to find debt financing hard to secure, there is increasing demand for private equity capital to finance growth.”

Private equity deals have been thin on the ground over the past two quarters as funds had their allocations reduced or pressure was exerted by limited partners not to draw down commitments for investment. However, last week it was reported that US buyout fund TPG and the Russian state bank VTB had bought a 35.4% stake in Russian hypermarket chain Lenta for about $115m.

TPG is thus far the only international buyout fund with an office in Moscow but has found deals elusive. In the summer of 2007, a protracted deal to acquire the grocer Seventh Continent collapsed over price, while in April last year, TPG signed a contract to buy half of SIA International, Russia's largest pharmaceutical distributor, for $800m. TPG later withdrew and paid a fine of $50m.