RenCap salesman fired as Russian banks get ahead of themselves in Iran

RenCap salesman fired as Russian banks get ahead of themselves in Iran
By Jason Corcoran January 21, 2016

Amr Aboushaban, a senior equity salesman at Renaissance Capital in London, has been dismissed after meeting with sanctioned companies in Iran, according to insiders at the Russian investment bank owned by oligarch Mikhail Prokhorov.   

Aboushaban, who has described himself at conferences as “chairman of RenCap’s frontier markets business development”, left the bank in mid-January after meeting three sanctioned companies in Iran, RenCap insiders told bne IntelliNews. Aboushaban, an Arab-speaker with a decade of experience at Merrill Lynch and RenCap, had been leading research on Iran for two years and organized “educational trips” for institution investors with assets of over $3 trillion. 

A spokesperson for RenCap in Moscow declined to comment, saying the company, as a policy, doesn’t comment on individuals. Aboushaban didn’t answer calls or texts to his UK mobile nor did he answer an email seeking comment. His colleague on the equity desk in London said he had left the bank this week while declining to give further details.  

Russian banks, including RenCap and VTB, are keen to exploit opportunities in Iran after almost two-decade long international sanctions were lifted early in January, but the potentially lucrative roadmap to Tehran is still mined with regulatory tripwires.

Still smarting from huge fines imposed by US regulators for breaching the old sanctions regime, many of the larger European banks are worried about falling foul of the US sanctions laws that remain in situ. UK bank Standard Chartered paid $327mn in fines in late 2012 for violating international sanctions on Iran and a handful of other countries, and it’s less than a year since France's BNP Paribas was fined $9bn for sanctions violations. Germany’s Deutsche Bank was also penalised $258m for violating similar American sanctions while France’s Crédit Agricole agreed to cough up $787mn. 

Indian and Chinese banks have been bolder than their European counterparts and have built up the most significant presence of any foreign lenders in Iran. China Development Bank said it has a strong lending relationship with Iran, while State Bank of India has a long standing presence in Tehran.

Athough the US is lifting sanctions that effectively barred international banks from Iran-related transactions, it is keeping those that penalise anyone doing business with companies connected to Iran’s Revolutionary Guard, which has extensive and complex economic interests. The remaining sanctions will also ban most transactions conducted in US dollars.

The Russian banks, many of which are living under less onerous sanctions linked to the Ukraine conflict, are keen to try to navigate the minefield as the international capital markets remain shut for their domestic client base.

Search for business

Over the past 18 months, Russian bankers have been hunting for deals in far-flung countries in a bid to drum up business. RenCap, which positions itself as a frontier investment bank, reopened its Dubai office last summer and has organised a number of client and analyst fact-finding trips to Iran over the past couple of years. Insiders at RenCap say they are still a long way from being able to put boots on the ground or tie up with a local brokerage.

A spokesperson for RenCap said the bank has conducted “extensive research of Iran’s economy and industry sectors since 2014", and is ready to consider business opportunities when sanctions were fully lifted. “The company sees substantial interest from clients regarding Iran, and is currently assessing potential business activity in this country,” the spokesperson said in an e-mailed statement to bne IntelliNews. “We will provide updates on concrete steps in due course."

Analysts at RenCap forecast that $1bn will pour into Iran this year after sanctions were lifted following the landmark nuclear agreement agreed in August between Iran, the US and other world powers.

Multinational companies, including some of the biggest retail and energy companies, are lining up to tap the potential of a country with the same 80mn population as Germany. Ashmore Group, the emerging markets debt powerhouse, said the removal of sanctions could open up Iran’s $100bn stock market and benefit companies that do business within the country.

Russian state-controlled VTB, which has been directly sanctioned by the US and EU over Ukraine, last year completed a series of M&A deals involving its investment bank in China, India, Turkey, Spain and Portugal. VTB is interested in providing lending, capital markets, equity trading and trade finance to clients in Iran, according to a source close to the state-controlled lender.

“In connection with the lifting of sanctions with Iran, VTB is exploring the possibilities and prospects of the local market,” VTB’s press services said in a statement emailed to bne IntelliNews. “Talking about the specific plans of the bank is premature.” 

Veterans of the Russia’s capital markets are already in the vanguard of the invasion into Iran. Florian Hellmich, a former global head of equity distribution at RenCap, is CEO of Pomegranate Investment, which has already made investments in three Iranian corporates. Pomegranate is backed by Per Brilioth, a Swedish investor in Russia who turned to Iran and other frontier markets after Moscow’s equity markets imploded. About $8mn of Pomegranate's fund has been invested in Griffon Capital, an Iranian investment bank, an online classifieds website Sheypoor, and a private equity firm Sarava. Other backers of Pomengrate include Jonas Nordlander, who runs the Russian classifieds company Avito.

First Frontier, a pan-frontier investment bank, was set up former alumni from Russia’s Aton Capital and ING to source investments in Iran and other markets. The firm is believed to have put off plans to raise  an Iran-sanctions compliant fund in order to focus on its alliance with a local brokerage.