Russian billionaire Mikhail Prokhorov is considering an initial public offering for his Renaissance Credit consumer lender in a bet financial stocks have hit “bottom,” the head of his holding company said.
“We will start preparing RenCredit for an IPO,” Onexim Group Chief Executive Officer Dmitry Razumov said, adding that a final decision hasn’t been made. By the end of the year, the outlook for the financial markets and strategic opportunities will become clearer, he said.
Prokhorov, who acquired about 50 percent of Renaissance Capital, or RenCap, for $500 million four years ago, wrested control of both RenCap and RenCredit from founder Stephen Jennings on April 4. RenCredit offers consumer loans, credit cards and deposit services to about 5 million customers across Russia, according to the company.
RenCap is paring back Jennings’s push into faster-growing emerging markets, including in Africa, to focus on Russia. RenCap shuttered its operations in China, India, Kazakhstan and Ukraine last year to cut costs and staff in half. The bank slumped to eighth in organizing Russian equity sales in 2012 from first in 2010 as bigger state-run lenders VTB Group and OAO Sberbank pushed into investment banking, data compiled by Bloomberg show.
RenCredit reported last week that it boosted net income about 15 percent to 3.1 billion rubles last year on higher lending, while non-performing loans expanded to about 8 percent of its portfolio.
“Stocks of financial institutions have reached bottom,” Razumov said in an interview in Moscow on April 18. “At some point the sector should start to attract investor attention.”
Russia’s Micex Financials Index has slid 11 percent this year compared with a gain of 2.5 percent for Europe’s Stoxx 600 Banks index.
Prokhorov, 47, gained control of RenCap and RenCredit after rebuffing New Zealand native Jennings’s request for more funding amid losses, two people with knowledge of the matter said in November. RenCap is in the process of selling “non-core” assets in Africa, Russia and Ukraine to raise hundreds of millions of dollars, Razumov said.
Nothing to Jennings
“We didn’t pay anything to Jennings,” Razumov said. “The investment bank’s liquidity position was hurt.”
Onexim spent “hundreds of millions of dollars to strengthen it,” Razumov said. “Despite a pretty tough environment, management knows what to do: clean up the balance sheet, control costs and maximize revenues.”
China Investment Corp. and the Russian Direct Investment Fund bought the company’s stake in Russian Forestry Products, Razumov said. It has also sold small stakes in some African banks and an African mining company and is in the process of selling its share of the Macquarie-Renaissance Infrastructure Fund, he said. Onexim is also considering buying out Ukrainian Agrarian Investments from RenCap to ease the investment bank’s balance, according to Razumov.
RenCap Co-CEO John Hyman said in February that Macquarie Group Ltd., Australia’s largest investment bank, was in the process of buying RenCap’s share of the infrastructure fund, which manages about $630 million of assets, including in railway, power and telecommunications companies. Damien Secen, head of Macquarie in Russia, declined to comment on ownership changes at the fund when contacted by e-mail.
Prokhorov, a former CEO of OAO GMK Norilsk Nickel, Russia’s largest mining company, owns the Brooklyn Nets basketball team and sold 37.8 percent of Polyus Gold International Ltd. to other billionaires this month for $3.6 billion. He ran against Vladimir Putin in last year’s presidential election and has said he’s interested in running for mayor of Moscow.