Russian Distressed Debt Fund Lures Ex-Goldman, RenCap EmployeesAnna Baraulina
A former Goldman Sachs Group Inc. analyst and ex-trader at Renaissance Capital are setting up a $130 million hedge fund focused on Russian assets, betting they’ll recover from a selloff spurred by oil’s decline and sanctions.
Promeritum Investment Management LLP, founded by Pavel Mamai and Anton Zavyalov, plans to start investing in February, Mamai said in a Moscow interview. Richard Mhende from Quiris Capital will be the venture’s third partner.
“Russia is the main focus, as all assets are very cheap right now,” Mamai said. The fund intends to put money into instruments including distressed debt and will also look at equities. The former Soviet Union, Turkey and Africa will be the main markets for Promeritum.
Russia’s economy is heading for its first recession in six years in 2015 after a plunge in crude prices and sanctions imposed by the European Union and the U.S. cut investment and sunk the ruble. Outflows from Russia funds for the past 12 months totaled $2.6 billion, or 4.6 percent of assets under management, which was the worst result among the BRICS countries, Sberbank CIB said Dec. 19, citing EPRF Global data.
The new fund is seeking annual returns of 10 percent to 15 percent, Mamai said. The money was raised from a family office for a term of at least two years while Promeritum seeks co-investors.
The situation around coking coal producer and steelmaker OAO Mechel is potentially of interest, Mamai said. The company partially ceased payments on $7 billion of debt this year after coal prices fell.
“Many investors are eager to put money into distressed assets in these difficult times,” said Vladimir Tatarchuk, founder of Proxima Capital Group, a financial-services company based in Moscow. Proxima is also planning a new distressed-debt fund, he said.
Former employees of Renaissance Capital have already set up similar funds. After the 1998 crisis, Richard Deitz, who was one the investment bank’s founders, established VR Capital Group to invest in bad debt and now manages more than $2 billion. Deitz didn’t respond to a request for comment yesterday.