By Marcus Williams

Renaissance Asset Managers, the investment unit of Renaissance Group, has hired Dmitry Mikhailov from Uralsib as a fund manager.

Mikhailov will run two of Renaissance’s Russian equity retails funds known as PIFs and co-manage the RenShares Utilities Fund, which Sergey Bubnov lead manages.

Mikhailov was at Uralsib as portfolio manager on sector PIFs as well as on the Russian Small and Mid Cap Fund. Last year  Uralsib’s Power Utilities PIF was the best performing Russian utilities fund, having increased in value by 297.63%* in USD terms.

Before joining Uralsib in 2006, he was CEO of a local asset management boutique, managing HNWIs’ savings globally. In 2002-2005, as CIO of private equity fund HealthTech Corp., Mikhailov was responsible for investment research and M&A.

Renaissance recently spun off its fund management arm from its wealth management business.

By Ivan Anderzhanov

Prosperity Capital, Russia’s biggest portfolio fund manger, has raised just $150m for its Quest 11 special situations fund, well below its $500m target.

The original Quest’s taggering 3,000 plus returns over a decade were not enough to entice more institutional investors to part with their money.

Investors in the new vehicle include Nordic, Continental European and Middle Eastern institutions and family offices, in what has been admittedly a tough climate for European fundraising.

Mattias Westman, founding partner at Prosperity, said in a statement: “It is pleasing that Prosperity Quest II has attracted strong institutional interest and that we have completed one of the largest Emerging Market fund launches of the last three years – despite the current turbulence in the global markets.

By gaining exposure to company restructuring and consolidation opportunities in Russia and the CIS, Prosperity Quest fund has returned 43% a year in dollar terms since its 1999 inception. It is the world’s best performing fund over the last ten years, in all categories, according to Morningstar data.

Quest II is designed to tap into similar restructuring and consolidation opportunities – but within a closed ended structure formed by a privately-held vehicle, domiciled in Guernsey.

By Andrei Skvarsky

The Micex company is planning an initial public offering which will see the state-backed bourse relinquish its controlling share.

The company sets itself the deadline of the end of 2011 for taking over Micex, where the Russian Central Bank is the main shareholder. The Central Bank wants to keep a stake in the Micex company after the planned IPO but its interest is expected to drop to 10% from today’s 36%, Russian daily Kommersant said.

It is unclear when exactly the IPO would be held.

“After many years of debates there is a consensus between the branches of government that this process needs green light,” said Sergei Shvetsov, director of the Central Bank’s financial market operations department.

The financial markets regulator also backs the project. “We have discussed this matter with Micex and support the proposal as a way of setting up a vertically integrated stock exchange structure,” said Vladimir Milovidov, head of the Federal Service for Financial Markets. He described the planned IPO as “a step towards setting up a consolidated holding company and expanding the range of shareholders”.

Milovidov suggested that another Russian stock exchange, RTS, be involved in the IPO. As EmergingMarkets.me reported on July 1, there is a proposal to merge RTS with Micex as part of a plan to set up a central national depository, a project that lay dormant for several years before being set back in motion about a month ago.

A Micex company shareholders’ meeting this week confirmed Ruben Aganbegyan, an ex-president of Moscow investment bank Renaissance Capital, as president of the  exchange. Aganbegyan is the son of Abel Aganbegyan, one of Mikhail Gorbachev’s key economic advisers during perestroika.

By Ivan Anderzhanov.

VTB Capital is continuing its aggressive expansion with the recruitment of Vladimir Potapov from Troika Dialog to the position of head of portfolio management business of VTB Asset Management.

Potapov will supervise the strategy development and implementation in Portfolio Management Business. VTB said the new appointment will “strengthen VTB AM positions in the asset management market, maximizing effective synergy with other business lines. “

Prior to joining VTB Capital, Potapov spent over seven years at Troika Dialog. He graduated from the Higher School of Economics and People University of China (Beijing). He is also a CFA Charterholder and was named in 2006 by Finance magazine as one of Russia’s top 10 fund managers.

Yuri Soloviev, President and Global CEO at VTB Capital, said: Potapov will expand VTB Asset Management’s  client base on global markets. He said: “This will enable the portfolio managers’ team to continue their outstanding performance and gain further recognition from private and institutional clients”.

Vladimir Kuznetsov, Equity Analyst at UniCredit Securities.

The state is ready to sell stakes in 10 of the largest state-controlled companies and banks in 2011E-2013E, raising at least $30bn and partly covering the budget deficit, Reuters reports, quoting sources at the Finance Ministry. Prime Minister Vladimir Putin reportedly approved the idea in principle at the latest government meeting.

The Finance Ministry proposed selling the following:

■ 27.1% in Transneft (current stake – 78.1%)

■ 9.3% in Sberbank (60.3%)

■ 24.5% in VTB (85.5%)

■ 24.16% in Rosneft (75.16%)

■ 49% in Russian Agricultural Bank (100%)

■ 28.11% in Federal Grid Company (79.11%)

■ 9.38% in RusHydro (60.38%)

■ 25% in Sovcomflot (100%).

The government decided to postpone the sale of stakes in the Agency for Housing and Mortgage Lending (49% of 100% owned) and Russian Railways (25%-1 share of 100%), the latter until the privatization of its subsidiaries, Reuters reports. According to its sources, the privatizations should bring RUB 298bn into the state budget in 2011E, RUB 276bn in 2012E, and RUB 309bn in 2013E. We regard these numbers as minimum amounts, since the stakes in Sberbank, VTB, and Rosneft alone would be worth about $30bn at current prices.

Our view: The idea of further privatization of state companies is hardly new, but we believe such specific news could prove a catalyst both for the valuation of the companies themselves and for the stock market as a whole. If at current ownership levels dividends from state-owned entities are insufficient to meet fiscal needs, yet the state still wants to retain control, then we believe it makes more sense to sell everything above the controlling level.

We believe that the stock market should take the news positively, as greater liquidity would not hurt any of the stocks mentioned, even market leader Sberbank. At the same time, we think that the process of privatization might – and in some cases, such as Transneft, should – improve corporate governance. We also believe that the Russian equity universe would benefit from the addition of new names, should the state decide in favor of a public offering of Sovcomflot, Russian Railways, Russian Agricultural Bank and/or AHML.

As for the demand and the eventual outcome of the privatizations, much will depend on the terms of each sale, as well as market conditions. In better times, such as 2007, the market had no difficulties digesting $40bn of Russian IPOs/SPOs, and so if market conditions are favorable, the state should have little difficulty placing USD 10bn in each of the next three following years.

Looking ahead to 2011E, we regard the stakes in RusHydro and Sberbank as the most easily “sellable” assets; a Sberbank sale could be facilitated by the launch of long-awaited depositary receipt program and their listing in London. The Sovcomflot IPO has also been preannounced for 2011E.

We also believe that the plan is a positive development for the RUB, as such a sell-off could support stronger capital inflows into the country. The sale of Rosneft and Sberbank stakes was the key factor behind the record $81.7bn in private capital inflow in 2007 and the related strong appreciating pressures on the RUB during the period. We also note that a $30bn boost to the budget could reduce the cumulative deficit over the period by 20%- 25%, which should also ease any rise of domestic interest rates.

Conclusion: We regard the news as positive for the RUB, the market as a whole, and the specific companies mentioned, especially those most sensitive to privatization news, such as Transneft.

By Andrei Skvarsky

VTB Capital has made two high-profile hirings by appointing Andreas Boesenberg, a former partner at a German investment boutique, as deputy head of private equity and special situations and taking on Iain Grosvenor from Credit Suisse as a consultant.

Boesenberg, who will be based in Moscow, was a partner at Wermuth Asset Management (WAM), a firm that has its headquarters in Wiesbaden and advises on alternative investments in Eastern Europe, primarily Russia. He has co-founded and co-managed a $70 million private equity fund, VTB Capital said in a statement.

Boesenberg, who holds degrees from the London School of Economics and Sussex University, has carried through more than 25 private equity transactions in Russia, Germany and the U.S. over the past decade.

Grosvenor, a Liverpool University graduate who works at the Russian bank’s London office, specialises in business process analysis and improvement and in human resources management.

VTB Capital, which is aggressively fighting its way into Russian and international financial markets, debuted over two years ago by poaching more than 100 staff from Deutsche Bank and has a 2010 target of boosting its personnel by 40% to 1,000.

By Ivan Anderzhanov.

Credit Suisse has named internal candidate Steven Hellman to lead its business in Russia and the CIS after scouring the entire market for a replacement for Fawzi Kyriakos-Saad.

Kyriakos-Saad recently moved to London to replace Eric Varvel as head of Europe, Middle East and Africa region. Varvel has been named as chief executive officer of the bank to replace Paul Calello who is suffering from a serious illness.

Banking insiders said Credit Suisse has been looking for over a year under every stone for Kyriakos-Saad’s replacement.  Hellman, as head of investment banking in Moscow, had been putting his hand in the air for quite some time before the Swiss bank’s management clocked him.

Credit Suisse First office in Russia opened in 1991 and is one of the leading foreign investment banks in Moscow.  Hellman will work at developing investment banking, asset management and apparently private equity, according to a statement today.

Hellman joined Credit Suisse in 1997 and worked for two years as part of the global energy group in London and Moscow. After several years in other companies, he returned to Los Angeles branch of Credit Suisse in 2004.

By Andrei Skvarsky

Alfa-Bank, oligarch Mikhail Fridman’s investment banking group, has denied rumours Gene Movdavsky is stepping down as head of corporate finance.

Insiders said Moldavsky, who joined Alfa-Bank in 2007 after resigning as executive director at Swiss bank UBS, is leaving but Alfa’s international media office told EmergingMarkets.me this was not true.

An employee at Moldavsky’s office said the banker is on leave and is due to be back Aug 9 or 10.

Moldavsky, a graduate of Boston University, and Edward Kaufman, who co-heads Alfa’s corporate investment banking division, both served at UBS before joining Alfa, Kaufman being head of investment banking at the Swiss firm.

By Andrei Skvarsky

Ruben Vardanian, founder and chief executive of Troika Dialog, is considering selling out of the Moscow-based firm with chances that the oldest brokerage in Russia will slip under Russian state control, according to RBC Daily.

Sberbank and VTB, two state-controlled heavyweights in Russia’s  banking sector, are among potential buyers of Vardanian’s 39.22% stake. Others are top Troika executives and South Africa’s Standard Bank, which already owns one-third of the Moscow bank, the daily said, citing unidentified sources.

VTB denied any plans to buy Vardanian’s shares.

Sberbank deputy chairperson Bella Zlatkis claimed to know nothing of her bank seeking control of Troika. Yet there have been rumours practically since the outbreak of the world financial crisis that Troika may come under the dominion of Sberbank, whose priority targets include boosting investment banking, a business where Troika is one of the leaders.

In 2008, Sberbank lent $254 million to the Moscow School of Management in Skolkovo, of which Vardanian is president and one of the founders.

Vardanian has a string of top jobs with various companies, including the chairmanship of the board of directors of Russia’s Sukhoi Civil Aircraft and senior positions in his native Armenia.

Troika insiders say the the brokerage’s entrepreneurial culture has been gradually eroded since South Africa’s Standard Bank took a third stake in August 2008. A number of key bankers have parted company while Troika has lost market share in debt capital markes to VTB Capital.

By Marcus Williams.

US stock exchange NASDAQ is to provide Russia’s Micex with market data audit services.

NASDAQ compliance’s boffins will provide on-site and off-site reviews to ensure customer use of Micex’s data product content is compliant with the exchange’s policies.

Eugeny Ellinskiy, vice president of Micex, said in a statement: “Information transparency is an important principle of MICEX exchange activities. I am sure that the rich experience of NASDAQ OMX will help MICEX improve the information services and products market.”

By Chris Weafer, chief strategist at UralSib Capital

Asia’s equity markets are trading, on average, 1.0% lower in early afternoon trade after an initial steeper decline was moderated by a small bounce in the US equity Futures and a 1.0% gain for China’s Shanghai Index. That was because of measures announced to boost low income housing. The Nikkei is the worst of the major Asian markets as the yen continues to rally against the dollar (last at 86.695) and puts export competitiveness at risk.

The dominant factor in all global markets is again the concern that the global recovery is stalling. The case for the bears received a boost on Friday with a big drop in a US consumer sentiment survey and worse than expected results from GE and two big Wall Street banks. The bulls have been quick to point out that, albeit less than expected, there is still good underlying growth and that, realistically, recovery was always going to be patchy rather than straight line. Most investors will continue to take the view that, through the mid summer period at least, they are better off on the sidelines and holding onto relatively high cash positions until the trend becomes clearer.

In isolation, the case for Russian equities and the ruble remains positive with growth continuing to build and corporate reports strong enough to support the view that assets are cheap relative to global emerging market peers. But the dominant driver will remain the global environment for some time. That means opening weakness to reflect the 2.9% drop for the S&P, i.e. more than twice the decline when Moscow’s bourses closed on Friday, and a weaker trend for the ruble to follow the weaker trend in Asia’s developing economy currencies today.

The dollar-euro rate last marked at $1.2902 and the price of gold is at $1,192.40 per ounce. Industrial metals are staging a small rally after Friday’s big sell-off with, e.g. copper up 1.0%.

But, that opening weakness will be a mark-down rather than a sell off as the US Futures are indicating a small opening bounce and the price of crude oil is still generally resilient to growth fears. WTI for August last traded above $75.50 p/bbl and Brent is also above $75 p/bbl. So long as oil stays above $70 p/bbl then, while Russia will not bounce in isolation of global trends, it will avoid a sell-off.

The trend towards safer domestic themes was evident in the US market on Friday and also in Russian ADR trade. Mechel closed down 5.9% while Vimpelcom gained 0.2%. That trend may also be more pronounced in Moscow trade while waiting for global market recovery.

The dispute involving Polyus Gold in Kazakhstan is turning increasingly nasty with fresh allegations made by the Assaubayev family that sold 50.1% of KazakhGold to Polyus last year and whom Polyus is suing for $450 mln.

Vedomosti newspaper, citing unidentified officials, claims today that the government will impose a gas extraction tax of 10% to 15% from 2011. The tax reform debate will likely be the most important policy discussion in government over the next year and will give rise to lots of speculation about possible tax changes and about which industries may be targeted. The question of a gas extraction tax has been debated for many years and, so far, has not been supported by cabinet. The bottom line being that Gazprom’s capex programme is so large that it needs the cash flow.

Today is a light day for economic reports with only a housing market index scheduled for the US and some May reports due in Europe. The 2nd Qtr earnings season picks up pace this week with a large number of S&P companies scheduled to report every day this week. As always, a good series of positive numbers will reverse Friday’s nervousness while some more big misses will compound it.

The full end June macro report for Russia will also be published this week, showing the trend in retail sales, unemployment, construction spending, etc. Last week’s industrial production report was less than expected and not strong enough to support the more optimistic GDP growth indicators. It will need to pick up from here. Retail sales growth is expected to pick up to an annualized 5.9%, from 5.1% at end May, and the unemployment rate is forecast to drop from 7.3% to 7.2%.

By Andrei Skvarsky.

Vladimir Bragin quit as chief economist at Moscow-based bank Trust to join Alfa Capital, oligarch Mikhail Fridman’s asset manager.

Moscow’s community of economists are developing itchy pants syndrome in the last few months with many of the leading names switching banks.

Bragin, whose departure about a forthnight ago was confirmed by a Trust spokeswoman, is the latest in a string of Moscow economists to find new roles this year.

Rory MacFarquhar quit Goldman Sachs in March to be hired as a senior adviser by the U.S. Treasury Department.

Ivan Tchakarov of Japan’s Nomura in Moscow was tapped by Bank of America Merrill Lynch in late April as their chief economist. The role had been previously vacated by Yulia Tseplyayeva, who went over to French bank BNP Paribas to be their chief number cruncher.

Tatiana Orlova also upped sticks in April as senior economist for Russia and Kazakhstan at the Netherlands’ ING Group. She was replaced by Dmitry Polevoy from Russian bank KIT Finance.

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