Prokhorov reportedly in talks to sell stake in Russian bank Rencap to Chinese firm

Prokhorov reportedly in talks to sell stake in Russian bank Rencap to Chinese firm
Russian tycoon Mikhail Prokhorov, who is said to be in talks to sell stake in RenCap. / WikiCommons
By Ben Aris in Berlin August 17, 2016

Russian billionaire Mikhail Prokhorov is in talks with the Chinese firm Fosun International over the possible sale of a stake in his Russian investment bank Renaissance Capital, Vedomosti reported.

The Chinese conglomerate and investment group is interested in buying the stake as a way of increasing its presence in emerging markets, the paper reported.

Rencap was set up in the 1990s by two young, Western pioneering investment bankers Boris Jordan and Stephen Jennings. After a rocky start in the late 1990s, Rencap came into its own after the 1998 crash and emerged as a leading investment bank in the country. In the noughties it expanded its mandate and opened offices in Africa, where it became a leading player too. However, having expanded too fast, the bank ran aground in the 2008 crisis and sold control to Prokhorov who had long been an investor and partner in the bank.

The sale adds to speculation that the party-loving billionaire is seeking buyers for all of his assets after his business offices were raided by the Federal Security Service (FSB) earlier this year. Dubbed the "Great Gatsby oligarch" in a bne IntelliNews profile in June, Prokhorov fell foul of the Kremlin following a series of investigative reports by his RBC media holding into individuals close to the Kremlin.

A source close to Prokhorov's Onexim investment group told bne IntelliNews that the group believes the raids were authorised by President Vladimir Putin himself after RBC reported on the business dealings of his daughter Ekaterina and her husband Kirill Shamalov.

Prokhorov, whose fortune of $15bn more than halved since 2011, has already put his 20% stake in potash producer Uralkali, his power utility Quadra, as well as RBC up for sale. His stakes in miner Rusal, consumer lender Renaissance Credit, real estate holding OPIN and the high-brow online magazine Snob are also reportedly up for sale.

Negotiations for the Rencap stake already started several months ago, Vedomosti reported. Fosun is not reported to be looking to take control of the bank, which bases its operation in London, although still has a big office in Moscow, and the main interest of the Chinese company is getting access to the emerging markets platform the bank can offer. Rather, Fosun is intending to buy a minority stake in the bank with an option to increase its stake later. A valuation for the bank has not been agreed yet, reported Vedomosti. But the deal is complex and negotiations are going slowly, sources close to the Chinese said.

The deal for Rencap would not be Fosun’s first foray into Russia, as it is also in talks with department store TSUM owner Dmitry Rybolovlev to buy the business centre Vozdvizhenka Center (aka "Voentorg"), according to reports. If the mooted $180mn-190mn deal comes off, it would be the first investment by a private Chinese company into Russian real estate.