Prokhorov buys half of RenCap
Renaissance Capital, one of Russia’s biggest investment banks, on Monday said it was selling a 50 per cent stake to a billionaire oligarch for $500m in a deal accelerated by the steepest declines on the Russian market in a decade last week.
The deal wipes three-quarters off the $4bn price Renaissance valued itself at during talks with a state-controlled bank, VTB, last year.
Stephen Jennings, chief executive of Renaissance Group, said he speeded up ongoing discussions with Mikhail Prokhorov, the cash-rich owner of Onexim Group, last week as the Russian market tumbled and liquidity dried up. He said Renaissance was following in the footsteps of the biggest US investment banks as they sought safety by hooking up with new cash-rich owners.
“The kind of balance sheet we will need in future . . . is very different to how investment banks have been allowed to operate for the last five or six decades,” Mr Jennings told the Financial Times.
“The world was changing under our feet that quickly that you have to execute very fast. You have to sacrifice something in order to consolidate your position,” he added, conceding the low price. “It was an avalanche and we could not wait and see if it was going to stop.”
But he denied the sale was rushed through to cover losses on operations. “We don’t have any losses,” he said.
Russia was still seeking to stave off a wider contagion on Monday as it announced an increase to Rbs700,000 ($28,000) in the top level of bank deposits it would protect under the state deposit insurance scheme in order to boost confidence in the wider banking system. Last week, the country was forced to close its two main bourses for two days as stocks fell as much as 20 per cent in one day.
The finance ministry also announced it was delaying quarterly payments of value-added tax in another emergency measure to boost liquidity in the banking system.
The sale to Mr Prokhorov puts Renaissance back in partnership with one of its founding partners. Mr Prokhorov cashed out of a 25 per cent stake in Norilsk Nickel when prices were at their height in May.
In 1997, the bank merged with MFK, the banking arm of Mr Prokhorov’s and Vladimir Potanin’s Interros empire, to become MFK Renaissance. MFK split from Renaissance Capital after the August 1998 crisis.