The last 12 months have been tough for investment banks in Russia. Just as capital markets were starting to shake off the effects of western sanctions and economic slowdown, another round of sanctions – this time on individual oligarchs – stopped them dead in their tracks.
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It also cast a further chill over the already lackluster M&A market, says Ruslan Babaev, co-chief executive at Renaissance Capital.
“International buyers who are looking at Russian companies are taking much longer to finalize deals than previously,” he says.
Meanwhile, domestically, the increasing state dominance of the economy has boosted the role of state-owned banks in the segment – or, indeed, removed the need for any intermediation.
“Some state transactions are done directly between companies without the banks,” says Babaev.
That is bad news for Renaissance, Russia’s largest privately owned investment bank, which had been hoping to revive its M&A franchise following the appointment in October 2017 of ex-Goldman Sachs and VTB Capital banker Petr Molchanov as head of Russian investment banking.
