Renaissance boosts Russian buyouts

By
Brad Meikle
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Renaissance Partners has secured €424m (US$660m) of commitments for its maiden private equity fund. Launched in September 2007, the fund closed oversubscribed significantly ahead of its €321m (US$500m) target in just six months.

“This is the largest first-time fund in Russia,” said Mounir Guen from MVision, the placement agent that helped raise the fund.

The speed at which it was raised and the level of demand are evidence that investor attention is switching to emerging markets to chase future returns in the wake of the liquidity constraints in the US and Western European markets.

“The credit crunch is making LPs focus more on emerging markets as they look for the next growth story,” confirmed Guen.

Renaissance Partners is a subsidiary of Moscow-based Renaissance Group, an emerging markets specialist investment bank that is the cornerstone investor in the fund, having put up more than €160m Institutional investors, funds of funds and family trusts are among the other investors in the fund.

“For LPs investing in emerging market funds, it is a question of being able to identify programmes that can mature and diversify,” explained Guen, who believes that Renaissance’s “huge local knowledge” proved powerful in drawing investors to the fund.

In the past, lack of local knowledge has proved an obstacle to players trying to crack the Russian buyout market. Carlyle Group abandoned plans to raise a US$300m (€192m) Russian fund and closed its Moscow office after just a year in 2005.

Renaissance Partners will invest between US$50m and US$80m( €32m and €51m) of equity for controlling or significant stakes in Russia and CIS-based businesses. It has to-date backed Media One, a regional television company, and new media group DST.

Renaissance Capital’s €424m boost to the Russian buyout scene has been accompanied by news of other fundraisings as the country’s consumer boom continues to present opportunities. Mint is believed to be about to go to market with a third fund targeting US$300m–$500m( €192m-€321m) and last year Baring Vostok launched fundraising for a US$1.5bn( €962m) vehicle, while Troika Dialog is seeking US$1bn( €641m) for its latest fund.