Leonid Fedun and Vagit Alekperov sell the last major financial asset

The structures of Leonid Fedun and Vagit Alekperov put up Kapital Asset Management Group for sale - shareholders are afraid of a repetition of the 2008 crisis against the background of reduced profits. Among potential buyers of the asset - Promsvyazbank.
Origin source
Representatives of the financial group "Capital Asset Management" are actively negotiating the sale of the holding. This was told by three interlocutors in the stock market who are aware of this intention of the shareholders of the group and are familiar with the course of negotiations on the transaction. The priority is the sale of all structures included in Kapital, if such an agreement is not reached, then part of the business can be realized, one of the sources said. Promsvyazbank is among the most likely buyers, negotiations are actively underway with it and even due diligence has been held, but the decision has not yet been made, two of three interlocutors told Forbes.

Shareholders want to sell a group of companies for an amount equal to the entire holding capital plus 1 billion rubles, said one of the Forbes sources. The amount of capital at the end of 2017 was 2.8 billion rubles under IFRS, respectively, the amount of the transaction could reach 3.8 billion rubles.

The press service of the management company Kapital (the largest structure of the group) declined to comment. In turn, the press service of Promsvyazbank asked Forbes that the bank "does not comment on the rumors."

The ultimate control over the Kapital Asset Management Group belongs to the largest shareholders of Lukoil, Leonid Fedun and Vagit Alekperov, as well as the Our Social Future regional social programs fund, indicated on the website of UK Capital. In addition to UK Kapital, the group includes the companies Kapital Asset Management and UK Kapital PIF.

The management company Kapital is one of the key players on the Russian market, which specializes in pension funds management. At the end of 2017, Kapital's management company accounted for almost 80% of its assets in this area. In total, in the first quarter of 2018, under the management of the company, there were assets worth 161 billion rubles - this is the 14th place in the Expert RA ranking.

Usually, management companies in a growing market cost about 2% of assets, notes Yuri Nogin, director of the ACRA financial institutions rating group. “In a downstream market, a management company that works with institutional clients will be measured at the lower boundary, since diversification of such a business is difficult. What is offered for Kapital can be called a nominal price, and a premium of up to 1 billion rubles is a premium for business reputation, which Kapital remains fairly high, ”the analyst explains.

Promsvyazbank has its own small management company Promsvyaz, which managed almost 40 billion rubles at the end of 2017. The main areas of its business are private equity funds and wealthy clients. In late August, the management company Promsvyaz was headed by Aleksey Kuznetsov, who previously held the position of head of the Banking Sector Consolidation Fund, and previously the position of General Director of EFG Asset Management, which was engaged in the assets of the Bean Group.

“Kuznetsov is an ambitious person, and, probably, he will strive to increase the scale of his business,” says the Forbes interlocutor in the stock market. Another source notes that Peter Fradkov, who led Promsvyazbank this year, also has ambitions to expand the business. “He likes to do business so that it thunders,” stresses the financier.

What happened to "Kapitalom"

The search for a new strategic investor is due to the reluctance of shareholders to repeat the situation in 2008, when, due to the volatility in the market, the company had to be seriously capitalized, says one of the Forbes interlocutors.

In addition, against the background of the sanction threat, the risks of owning such an asset increase, and the income of investors falls. Revenues from trust management services for 2017 amounted to 739 million rubles, a decrease of 20% compared with 2016, when the figure reached 929 million rubles, calculated by the Agency Expert RA.

In recent years, the assets of UK Kapital have steadily declined. If in 2016 the company ranked 7th in the ranking with assets of 275 billion rubles, by the end of 2017 it moved to 14th place due to the reduction of the portfolio to 175 billion rubles. The reason was the termination of the management of military mortgage funds - the company did not win the competition. At the end of 2017, shareholders have capitalized the Criminal Code by 1.5 billion rubles.

The decrease in assets continued in 2018. Two large clients left the company: the funds were withdrawn by the NPF of Sberbank, which accounted for about 40 billion rubles, and the structure of Otkritie FC - about 8 billion rubles. Care of Sberbank NPF was associated with the transition of a part of the team to work at Sberbank Asset Management. In addition, at the beginning of September, the head of the management company Kapital changed - Vadim Soskov left the post, and the company was headed by deputy director Konstantin Belikov.

Lost in retirement

The sale of a financial asset by the shareholders of Lukoil looks like a logical step, because due to the threat of sanctions, a non-core investment business becomes less profitable and more risky, says Yuri Nogin from ACRA.

The structures of Fedun and Alekperov have long been reducing their presence in the financial markets: in 2008 they sold the insurance company Capital Insurance to the ex-head of Rosgosstrakh Danilo Khachaturov, and in 2012 the bank FC Otkritie bought the NPF Lukoil-Garant from them.

“Non-core financial assets are interesting when the market grows and when stagnation begins, especially for companies that are focused on specific customers, interest in them disappears,” notes Nogin.

The situation with management companies that work with pension funds corresponds to the current situation in the market for non-state pension funds (NPF), the analyst adds.

According to him, the funds now have a period of stagnation due to the freezing of pension savings in 2014 and the lack of new revenues to the system. This situation will not change until the government resolves the issue with the new accumulative system - PKI.

In the meantime, consolidation is taking place on the NPF market, large groups are being formed, which usually use the services of the Criminal Code, which is included in the perimeter of the financial group, to manage funds, Nogin said. “In general, the situation in which new pension savings are not transferred to NPFs has led to the fact that competition among the management companies has become heated, burned out and is already absent,” he states.

According to the general director of the management company Sputnik - Capital Management, Alexander Losev, now the funds of institutional clients in the asset management market are already distributed, and attracting new revenues is a rather costly and time-consuming process.

“Basically, the funds of pension funds and insurance organizations are managed by captive companies within each financial and industrial group. It is difficult to deal with mutual funds without our own retail network, and each family office has its own managers, ”he explains.

The business model of management companies is quite difficult to restructure, said Pavel Mitrofanov, director of corporate ratings for Expert RA. “For the development of the retail business, serious investments and a friendly banking sales network are needed, but such MCs have a good profitability due to a higher commission. In work with institutional clients, profitability is lower, but revenue is much higher due to large volumes of assets under management, ”the analyst concludes.