The latest developments from Russia over the last 3 weeks:
Russia
Stock markets in emerging economies of Brazil, Russia, China and India registered double or triple-digit gains in the noughties compared to the US equities market which shed almost 20%. That is despite the fact that emerging economies have been harder hit by the international crisis of 2008.
The big news among the movers and shakers of the Russian banking industry is that Pavel Teplukhin, a co-founder of Troika Dialog and a leading light in the development of Russia’s capital markets, has quit the Russian brokerage after 19 years without having a new job to go to. The rumour has it that he had a major disagreement with the Bank’s president Rueban Vardanian. Subsequently, Troika Dialog has slipped from its long-standing position as one of the country’s top three asset management companies, according to data from the National Rating Agency. Troika’s assets under management had fallen to 79.2bn roubles ($2.62bn), putting it in fifth place by the end of 2009.
Russian investment bank VTB Capital is planning a “second wave” of hiring at a senior level. We are on the PSL with them at 25% contingent roles, 30% retainers. The new hires will be made at a senior level and around 200 more people are expected to be hired over the course of this year. The bank’s first wave of hiring was orchestrated by its chief executive Yuri Soloviev, who was brought on board from Deutsche Bank. He helped stage the exodus of over 100 bankers to VTB, which left the German bank in Moscow reeling. A hiring freeze which was implemented earlier last year in the wake of the economic crisis is finally melting. The original plan hatched by VTB group chief executive Andrei Kostin was to build a corporate finance bank centred on Moscow Narodny Bank, the state-owned London bank which had a presence in international debt markets. The idea mushroomed into a full service investment bank with HQ in London.
Russia’s Renaissance Capital has boosted its London-based metals and mining capabilities with the appointment of Roger Murphy as a head of metals and mining sales and Jeremy Wrathall as a head of London metals and mining origination within the investment banking division. Murphy joins from Canaccord, where he has been head of resource and international sales in the firm’s London office since 2005. He will join Rencap as managing director in the London office and will lead the firm’s specialist metals and mining sales force. We are currently trying to establish a relationship with the Group.
Ukraine
The first round of Ukrainian presidential election was held at the end of January. National exit polls gave Yanukovich 31.3% of the votes and Timoshenko 27.1%, with former Central Bank Governor Sergey Tigipko surprising in third place with 13.2%, the second round of voting is planned for 7 February 2010. Under the election rules, if no candidate receives more than 50% of the vote, the leading two candidates go forward to the second round. Yanukovich is considered to be pro-Russian, mostly due to his affiliation with the largely Russian-speaking eastern regions of Ukraine. He advocates for Russian as a second official language and opposes Ukraine joining NATO. Russia openly supported him during the 2004 presidential election, which he ultimately lost. On the other hand, Timoshenko is regarded as a pro-Western candidate who opposes Russia’s military presence on the Crimean peninsula and was investigated by Russian law enforcement agencies on corruption charges. The Ukrainian presidential election will have a meaningful impact on Russian markets as many traded Russian companies have substantial business interests in the country (in particular Gazprom, Alpha Bank, Rencap) which could benefit from the reduction of the political component in the annual negotiations over pricing of gas supplies and transit tariffs to Europe.
Economy
Russian aluminium maker UC Rusal went IPO this month. It raised $2.24 billion from its Hong Kong and Paris initial public offerings, after the company priced the shares around the middle of the range indicated in marketing literature. Bankers said the listing could lead to a trickle of further Russian listings in Hong Kong but they doubt it will turn into a tide. The unknown quantity for other Russian companies looking east is whether Chinese retail investors will be interested in coughing up to invest in Russian companies, which are not always beacons for corporate governance. Westerns bankers said they doubted whether Hong Kong could yet challenge London’s position as the pre-eminent destination for Russian and international listings.
On the other side, The London Stock Exchange and the Micex today launched a Russian IPO information platform to serve the growing pipeline of Russian companies seeking to list overseas. T he site, which is located at www.RussianIPO.com, provides companies, advisers and market participants with access to trading information, news and statistics from Russia and the CIS in both English and Russian languages. Both exchanges have been cooperating on marketing dual IPOs in London and Moscow since they signed an agreement to promote Russian IPOs on their respective markets back in 2006.
