Banker aims to pave the way for Russian firms
VTB Capital, the investment banking arm of Russia's second-largest banking group, has opened a Hong Kong office and is eyeing business opportunities involving an increasing number of Russian companies planning to list on the local bourse.
Atanas Bostandjiev, VTB's chief executive for Britain and international markets, said the bank secured a licence from the Securities and Futures Commission at the end of last month to operate an investment banking and financial advisory business in Hong Kong.
It is the second Asian office for VTB, which opened its doors in Singapore two years ago.
Bostandjiev said: 'The Hong Kong market is an important gateway to capture mainland Chinese investors. This is an important step in our strategy to expand in Asia by providing a platform to help Russian companies issue equities or bonds in Hong Kong.
'Hong Kong and mainland Chinese investors can't directly invest in Russian markets right now. By bringing Russian companies to list in Hong Kong, we can facilitate investment into Russian firms from mainland Chinese and other international investors.'
Some Russian companies had expressed interest in listing in Hong Kong, attracted by its liquidity, he said. Some were also interested in issuing yuan-denominated bonds or equities to finance their development in mainland China.
Hong Kong Exchanges and Clearing has conducted several road shows in Moscow to attract Russian firms to list in Hong Kong, but it faces competition from London, which has been a key listing venue for Russian firms.
Rusal, the world's largest aluminium maker, is the only Russian company listed in Hong Kong.
'Hong Kong is an ideal market for Russian companies to list or issue bonds, given the diverse mix of investors, from institutional to retail, that understand emerging market opportunities,' Bostandjiev said.
Kenny Lee, chief executive of First China Securities, said Hong Kong investors were taking a wait-and-see approach when it came to Russian firms.
'Many local investors don't have good knowledge about the Russian economy or Russian companies. However, if more high-quality Russian firms listed here, local investors would be interested in investing in them,' Lee said. 'At the end of the day, it all depends on whether investors can make money from trading in these Russian companies.'
VTB Group, the parent company of VTB Capital, issued a yuan-denominated bond in January, making it the first Russian firm to issue a so-called dim sum bond.
Bostandjiev also said VTB wanted to establish a client base in Hong Kong to help companies and investors invest in Russia.
'It's about bringing Asian investors into direct contact with Russia,' he said. 'Russia is rich in natural resources, and China is one of the biggest consumers of natural resources. Our existing knowledge and strong client relationships in Russia mean VTB Capital is uniquely positioned to facilitate investment flows from Asia to Russia.'
VTB Capital has brokered more than 140 deals bringing more than US$73 billion worth of investments into Russia.
Bostandjiev wants international revenue to represent about 25-33 per cent of its global business in two to three years, from a relatively small proportion now. 'Russian companies are strong in oil and gas, retail, communication, media, metal and resources. Many investors are interested in the growth story of these Russian companies, and it gives opportunities for a Russian investment bank like us,' he said.
Bostandjiev, who joined VTB Capital in May, has worked at various international investment banks including Merrill Lynch and Goldman Sachs.
'The outlook for emerging markets is looking very good, and VTB Capital, with our established track record in Russia, is well placed to play an important role in helping to connect Russian firms with investors throughout Asia,' he said.
