Getin targets Russian bank for expansion
By Aleksander Nowacki
As the first step to its transformation into a venture capital fund, IT services firm Getin Service Provider is to begin due diligence on a medium-sized retail bank in Russia this week, the Business Journal can reveal.
The announcement comes at a propitious time, as last week brought news of the first major investment in that country's banking sector since the "Russian crisis" of 1998. Deutsche Bank is said to be negotiating the purchase of a 40 percent-50 percent stake in the United Financial Group for an estimated $60 million-$90 million (zł. 226 million-zł. 340 million).
Getin's investment is to be on a rather smaller scale, as the company is looking to spend around $10 million (zł. 37.8 million) on the bank, which has already received investment from the European Bank for Reconstruction and Development (EBRD).
"We are interested in services for small and medium-sized enterprises," said Marek Grzegorzewski, Getin's president. As it is also an area crucial to the EBRD's activities, there is scope for future cooperation, he said.
"If everything goes according to plan, the transaction will be completed by the end of the year," Grzegorzewski added.
The bank could also participate in co-financing the company's core business of leasing.
Getin's majority shareholder is Leszek Czarnecki, who owns the European Leasing Fund (EFL) group. Last week the Wrocław-based company initiated the process of taking over 49 percent of the shares of leasing company Carcade of Kaliningrad, at a cost of $1.2 million (zł. 4.5 million). The takeover process would be achieved through raising Carcade's equity.
"All the funds we get from Getin will be spent on the development of the company," said Konrad Dobecki, president of Carcade. Last year the company recorded a turnover of $4.5 million (zł. 17 million), most of it through its two Moscow branches. Those operations are to be expanded, and the proportion of revenues from car leasing is to grow from 40 percent to 70 percent. Getin has also acquired the option to increase its stock in Carcade up to 60 percent.
Marek Grzegorzewski described the Russian financial market as very promising, comparing it to Poland's market a decade ago.
"At the same time the existing laws are very up to date, resembling in many ways those found in western European countries," he said. "It's an interesting market for investors, though by no means an easy one."
The extent of the new venture capital fund's ambitions is not, however, limited to one country. Getin's plans include buying a leasing company and a bank in both Ukraine and Romania.
Meanwhile Getin's core business to date, namely IT services for small and medium-sized enterprises, has been moved to Getin Direct. More than 52 percent of the shares in that company belong to ProBell, a telecommunications and Internet services provider. Grzegorzewski said that the alliance with ProBell would allow Getin to offer a fuller range of services to its e-commerce center clients.
In the first quarter of this year, Getin Direct reduced its operating loss to €360,000 (zł. 1.6 million), a 20-percent improvement on the corresponding period in the previous year.
