STARS OF THE NEW RUSSIA: BEST COMPANIES
Baltika’s beers are consumed in 46 countries and account for more than 70% of Russian beer exports. The largest brewer in Eastern Europe and second-largest in Europe, Baltika’s sales volume rose 19.3% year-on-year in 2007 to 1.17 billion gallons, while export volume jumped 22.9% to 52.8 million gallons. Market share in Russia, where it operates 11 breweries, rose 1.2% to 37.6%. Net sales rose 29.5% to E2.25 billion ($3.56 billion), while net profit jumped 20.5% to $399 million. Its healthy finances allowed Baltika in 2007 to pay off its debut bond issue, a 1 billion ruble ($43 million) deal launched in 2004.
• Anton Artemiev, president
Pharmacy Chain 36.6’s name is derived from the ideal human body temperature—36.6° Celsius—reflecting the company’s focus on health and wellness. The company’s success as a health and beauty retailer is founded on offering high-quality products at affordable prices, while opening new stores in growing cities with more than 250,000 inhabitants. By the end of 2007 the retailer operated 1,224 pharmacies in 29 Russian regions, with new stores often added through acquisitions of competing chains. Its Veropharm division is an important pharmaceuticals producer. In 2007 the group posted a 65% year-on-year rise in consolidated sales, to $872 million.
• Artem Bektemirov, CEO
A $20 billion investment plan is helping Gazprom, the world’s largest gas company, maintain its position. The company’s gas holdings account for some 17% of global proven reserves and 60% of Russian reserves. It exports to 32 countries. Gazprom, 50.002%-owned by the Russian government, audits its new gas fields yearly to adjust volumes and estimated values of each field. It has audited 95% of its proven natural gas reserves according to international standards. Its capitalization grew by more than a fifth in 2007 to $330 billion.
• Alexey Borisovich Miller, chairman of the management committee
Established in 1993, RBC is a pioneer in Russia’s media market. Based in Moscow, it was the first Russian information agency to launch its own website and the first to create an online system with Russian capital markets trading data, and launched RBC-TV as the country’s first business television channel. It operates online newspapers and a variety of websites, focused on everything from travel and sports news to online auctions and job search engines. Its RBC Soft unit is a leading software developer. RBC-TV’s monthly audience in Moscow grew 89% in 2007 to 1.35 million viewers.
• German Kaplan, chairman and CEO
United Company Rusal is the world’s largest aluminum and alumina producer, operating in 19 countries. It has an annual output of 4.2 million tons of aluminum and 11.3 million tons of alumina, representing 12% of the global aluminum market and 15% of global alumina production. Its assets include bauxite and nepheline ore mines, alumina refineries, aluminum foil mills, aluminum packaging factories and power plants. United Company Rusal was created in March 2007, with the merger of Rusal, which was the world’s third-largest aluminum company; Sual, one of the world’s top-10 aluminum producers; and the alumina assets of Switzerland’s Glencore.
• Alexander Bulygin, CEO
With Rosneft’s oil production rising from 270,000 barrels per day (bpd) in 2000 to 1.6 million bpd in 2006, it estimates it has oil reserves to last another three decades. However, Rosneft is not resting on its laurels. It is introducing state-of-the-art technologies, optimizing expenditures, diversifying its resource base and expanding its asset portfolio to maintain long-term profitability. It operates more than 300 oil and gas fields and has projects throughout European Russia, Siberia, the Russian Far East, Kazakhstan and Algeria. Founded in 1993 as a state company, it emerged as a vertically integrated oil company from Russia’s oil privatization drive.
• Sergey Bogdanchikov, president
Hot- and cold-rolled products, roll-formed sections and pipes, section-rolling mills and coke-oven and by-products are what Severstal is all about. As a leading international steel producer, it has high-quality assets in Russia, the United States, France, Italy and the United Kingdom. The company, which has grown mainly through acquisitions, operates through four business divisions: Russian Steel and Metalware, Severstal North America, Lucchini and Severstal Mining. Revenues were up 23% year-on-year to $15.2 billion in 2007. Net profit also rose 33% to $1.9 billion. Strong domestic and export prices sparked a 27% rise in ebitda (earnings before interest, taxes, depreciation and amortization) in 2007, when sales volume also increased by 7% year-on-year.
• Alexei Mordashov, CEO
Comstar-UTS keeps Russian callers connected on the phone and online. As the third-largest telecom company in Russia and the CIS in terms of capitalization, it is a leading provider of integrated telecom solutions, with operations in several Russian regions as well as Ukraine, Armenia and Greece. Founded in 2004 through the merger of several telecom providers, the company incorporates JSC Moscow City Telephone Network, a fixed-line telephone operator in the Moscow metropolitan area, and Comstar Direct, the country’s largest Internet service provider. Comstar-UTS’s revenue rose 30% year-on-year to $1.1 billion during the first nine months of 2007, when net income was $110.3 million.
• Sergey Pridantsev, president
Moscow-based Rosvodokanal has been Russia’s leader in the operation of water supply and disposal systems nationwide since 1949. The company, which in 2003 became part of the Alfa Group, one of Russia’s largest privately owned financial and industrial conglomerates, was at the forefront of the restructuring and privatization of water supply systems in Russia and Ukraine. Rosvodokanal’s business model is based on acting as a national operating company through public-private partnerships. In 2007 Deutsche Bank acquired a 10% stake in the company from Alfa Group’s A1 subsidiary. In turn, A1 has bid on other Russian utilities through its Rosvodokanal unit.
• Alex Malakh, CEO
DOMESTIC BANK — Alfa-Bank
Alfa-Bank, Russia’s largest private commercial bank, is one of only a few Russian banks operating under international auditing standards, which it has done since 1993. In 2007 it became the first Russian bank assigned a BBB- bank survivability assessment by Standard & Poor’s. It also received an upgrade from Moody’s Investors Service to Ba1 with a stable outlook. Its total assets rose from $15.2 billion in 2006 to $17.1 billion during first-half 2007, when its return on assets (ROA) remained unchanged at 1.5%. The bank expanded its network of branches and representative offices from 229 in 2006 to 280 in 2007, servicing 2.6 million clients.
• Petr Aven, president
Arriving in Moscow in 1994, Citi was one of the first international banks to set up shop in the new Russia, where it now has more than 3,000 employees. Its more than 400,000 consumer banking and credit card customers are serviced through more than 60 branches and 300 ATMs in six cities: Moscow, St. Petersburg, Samara, Yekaterinburg, Nizhny Novgorod and Rostov-on-Don. Citi launched retail operations in 2002 and offers a full range of services to corporate and retail clients, including investment banking, corporate finance and equity capital markets products. For multinational companies in Russia, Citi is a familiar partner.
• Vikram Pandit, CEO
UralSib offers corporate and retail banking through more than 1,000 bank and insurance offices throughout Russia. Following an acquisitions spree, the group merged its five major banks—NIKoil IBG, Avtobank-NIKoil, Urals-Siberian Bank, Bryansky Narodny Bank and Kuzbassugolbank—in 2005. UralSib, which saw assets grow from $11.6 billion in 2006 to $15 billion in 2007, manages its business through six regional boards.
• Nikolai Tsetkov, president
Renaissance Capital is helping Russia’s corporate sector to grow by bringing companies to market. In 2007 it participated in a 5 billion ruble ($213 million) deal for Gazprom and AIZhK, a 2 billion ruble placement by Bank Renaissance Capital and a 5 billion ruble placement for Ursa Bank, among others. It was also a joint bookrunner for the $8 billion IPO by VTB, Russia’s largest-ever banking sector IPO. The investment bank is headquartered in Moscow but has a presence in sub-Saharan Africa, the Middle East, the CIS, New York and London.
• Alexander Pertsovsky, CEO
The largest bank in Russia and Eastern Europe, Sberbank services more than 1.4 million corporate clients throughout Russia, including over 90,000 small and medium-size companies. Its clients can access a network of more than 20,000 branches nationwide. Sberbank, controlled by Russia’s central bank, holds a 31.8% share of the country’s market for commercial loans and a 25.4% share of aggregate assets within the nation’s overall banking sector. The bank reported total assets of $181 billion through September 2007. As part of a regional expansion drive, it acquired CJSC Bank in Ukraine in 2007.
• Herman Gref, CEO
Citi has been in Russia since 1994, when it established Citibank ZAO as a local bank, and has since grown to serve more than 400,000 consumer banking and credit card customers. In 2002 the US bank launched its Global Consumer Group operations in Russia, offering its full portfolio of consumer banking products, including credit cards, personal loans, investment products, multi-currency checking and savings accounts and payroll services. Russian clients also enjoy the convenience of Internet and phone banking and 24-hour customer service.
• Vikram Pandit, CEO
Russia’s second-largest bank aims to become the country’s leading international bank, with its foreign exchange services forming part of its strategy. VTB, which had assets of $92.6 billion in December 2006, is focused on domestic companies engaged in foreign trade. The bank offers them a variety of forex trading services as well as consulting services on exchange rate formation, domestic forex market operations, and trading on exchanges, while also conducting international settlements for its clients.
• Andrey Kostin, chairman and CEO
Alfa-Bank provides a wide range of trade finance solutions. The bank arranges export loans to local companies through key foreign export credit agencies, including Germany’s Euler Hermes, Italy’s SACE, Austria’s OeKB, The Netherlands’ Atradius and Switzerland’s ERG. It also uses credit lines granted by some of the world’s leading financial groups. Alfa-Bank is broadening the nation’s trade sector by lending special support to medium-size businesses. The development of innovative structured debt instruments, including trade finance products, remains one of the bank’s stated priorities.
• Petr Aven, president
Deutsche Bank, which has been doing business in Russia for more than 125 years, is a market leader in servicing documentary operations between the CIS countries and the Baltic States. The bank’s clients include some of the largest Russian and multinational companies involved in foreign trade, principally in the oil, metals, manufacturing and food processing sectors. It offers worldwide trade and risk management, settlement of letters of credit, bank guarantees, short-term foreign trade finance, forfaiting and foreign exchange services.
• Charles Ryan, chief country officer (Russia) and CEO
In 2007 Troika Dialog became Russia’s first asset management firm to operate an endowment fund and launched the Troika Dialog-Life Fund, which offers shareholders a combination of life insurance and long-term capital appreciation strategies. The firm’s assets under management recently hit 250 billion rubles. The firm, established in 1996, remains a key player in developing Russia’s mutual fund sector. It opened a new trading center in 2007 that is one of the largest and best technically equipped in Russia.
• Ruben Vardanian, chairman and CEO
Structured commodity finance is one of Société Générale’s key areas of specialization. The French bank, which has been operating in Russia since the 1880s and which established Société Générale Vostok as a Moscow-based universal bank in 1993, has brought its know-how and global network to its more than 2,700 Russian corporate clients. The bank offers natural resources companies specialized products tailored to their specific needs, including pre-export financing and corporate secured commodity financing. It also offers a wide range of products for the country’s growing metals and energy sector.
• Jean-Pierre Mustier, CEO
UniCredit’s debt capital markets team is recognized for successfully raising debt financing for Russian companies through a full menu of fixed-income alternatives, including promissory notes, ruble-denominated bonds and eurobonds. Its corporate client base includes established firms as well as growing businesses seeking to expand their operations. UniCredit, which was known as Aton International until 2007 when it was renamed, is a member of UniCredit Group, a leading European financial group that gives the local operation a more global reach when it comes to fixed-income sales and distribution.
• Alexander Kandel, CEO
BNP Paribas’ growth in Russia’s market for syndicated loans continues to be driven by growth in demand for acquisition financing. Its loan and portfolio management system combines traditional bank loans with portfolio management functions by structuring, executing and managing credit risk transfer through derivatives for Russian and global clients. The bank was the world’s sixth-largest bookrunner of syndicated loans in 2006. Russian clients can tap into BNP Paribas’ global network spanning more than 85 countries.
• Baudouin Prot, CEO
When it comes to primary equities, Deutsche Bank does things on a grand scale. Dealogic and Thomson ranked it number one in equity capital markets in Russia by overall deal volume in 2007. Milestone deals included an $8 billion IPO for VTB Bank—the world’s largest IPO in 2007 and Russia’s largest banking sector IPO ever. Also noteworthy was the $1.9 billion IPO for PIK that marked Europe’s largest-ever real estate sector placement. Deutsche Bank held a 15.35% share of Russia’s equity capital markets deals in 2007.
• Charles Ryan, chief country officer (Russia) and CEO
Although Russian companies are increasingly seeking domestic banks to arrange their M&A deals, Merrill remains on top. Dealogic ranked it number one among Russian M&A arrangers in 2007, when the bank participated in 29 deals for $64.3 billion. This gave it a 32.6% share of the Russian M&A market. The bank’s growing presence in Russia will allow it to develop even more business. In 2007 it opened a new Moscow office, hired a head of global markets for Russia and acquired a 10% stake in Trust Banking Group.
• John Thain, chairman and CEO
Alfa-Bank’s team of in-house equity analysts produces award-winning research products, covering company and market fundamentals, as well as global, political and technical variables. Alfa-Bank’s equity research covers all major sectors in Russia in user-friendly formats. The 27-member research team is headed by chief strategist and head of research Ronald Smith, whose prior experience includes positions with such other heavy-hitters as ING Bank, Renaissance Capital and Citigroup Asset Management.
• Petr Aven, president
Founded in 1993, MDM Bank has successfully sought specific niches within the Russian financial market, including producing the country’s most comprehensive research on domestic bonds. MDM Bank’s fixed-income research products include daily analysis on Russian and CIS debt markets, a data newsletter that provides market figures in a user-friendly format and special reports on strategy and research. As one of the four largest private banks in Russia, MDM Bank’s research enjoys widespread credibility and has developed a strong fan base among investors.
• Michael Perhirin, chairman and CEO
Trust Investment Bank supplies domestic and international investors with a steady stream of high-quality eurobond research, including daily credit research on Russian and CIS eurobonds. It also provides technical data for both eurobonds and domestic bonds. Both products are generated by the bank’s award-winning in-house research team. The bank also has experience as a market player in the eurobond market, placing its own debut eurobond for $100 million in 2006 and placing similar issues for its clients.
• Michael Eggleton, CEO