BLOG: VTB Capital targets Gulf's sovereign wealth billions

Jason Cororan in Moscow

VTB Capital, the investment banking arm of state-controlled VTB bank, has hired ten staff for its new Dubai operation in a bid to lure sovereign Gulf money to Russia.

The bank is attempting to set itself up as a conduit for Middle East sovereign wealth money which might be interested in investing in Russia.  Domestic rivals Renaissance Capital and Troika Dialog have both previously set themselves up in the UAE’s most high-profile Emirate but their efforts haven’t yet translated into meaningful business flows.

On the flip side, the only Russians so far interested in setting shop in Dubai have been fur vendors. Energy giants Gazprom and Rosneft have largely shied away from making significant commitments in the Gulf region.

More wealthy sheiks from Gulf corporates and institutions are making the hike to Moscow but any deals have so far  fallen through bankers’ hands like fine sand.

VTB said it is looking at potential opportunities in investment management, M&A, infrastructure and capital markets and expects to announce its first transactions in the second half of 2009.

Management in Dubai for the launch said it had won mandates to manage the sale of at least three Islamic bonds for Russian companies, each of which could raise $200m-$500m.

The bank, which will presumably exploits the Kremlin for introductions to Gulf state ministers, also hopes to raise $1.4bn for a joint venture infrastructure fund.

So far, sovereign wealth money from the region has been busy buying up battered banking giants on Wall Street and the Square Mile. It remains to be if the biggest piggy banks in the world have any appetite for the Russian roulette investment wheel.

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