Updated April 5, 2008

   The Russian companies often prefer to work with the Russian investment banks when conclude the mergers and acquisitions (M&A) transactions. Experts suppose that it occurs due to the growth of transactions amount of small companies which prefer the less expensive services of the Russian consultants in terms of financial crisis.

   M&A Intelligence analytical group summed up the activity of financial consultants in 2007. The research considered the concluded transactions only, priced at no less than $5 million. Thus, the analysis did not comprise the transactions related to the business restructuring and establishment of joint ventures.

   Four Russian investment banks entered the top 10: Troika Dialog Investment Company, Alfa Bank, Renaissance Capital and NOMOS Bank. The Russian subsidiary of the global Morgan Stanley bank became the leader among the consultants at the M&A market. Previous year the bank occupied the third place. Morgan Stanley has doubled its indices foremost due to transactions consulting of Yukos assets’ sale (the aggregate cost of three transactions totaled $20,8 billion). According to Morgan Stanley managing director Pavel Fedorov, the Russian team enlargement contributed to the improvement of the bank positions. Deutsche Bank – previous year’s market leader – has moved to the sixth position after the head of the investment-bank direction Ilya Shcherbovich has left the bank in the middle of the previous year.

   When choosing the investment bank the Russian companies start to prefer the Russian consultants. "Russian financial consultants "tighten" positions of the global investment banks", mark the M&A Intelligence analysts. In the opinion of investment bankers, the Russian companies require the consultants to be maximum available when concluding the transaction at the M&A market. "Clients often require meeting the consultant quickly and discussing the transaction course. In this case it is more convenient to cooperate with the Russian consultants, because the foreign banks’ subsidiaries have often to agree on any activity with the London or New York office", explains the director general of Renaissance Capital in Russia Ruben Aganbegyan.

   In the opinion of director of NOMOS Bank mergers, acquisitions and strategic consulting department Vladlena Khrabrova, previous year the amount of transactions with the participation of companies representing the middle business has increased in the Russian M&A segment and that contributed to the activity growth of the Russian consultants. The research marks that the Russian consultants render the services mainly to the M&A transactions that cost to $1 billion (except for Troika Dialog Investment Company). "Such clients prefer to require services of the Russian consultants, just because the services cost of the foreign investment banks is higher", considers Vladlena Khrabrova.

   In the opinion of M&A Intelligence analysts, according to 2008 results one should expect the further positions strengthening of the Russian banks taking into account the protracted world financial crisis. "Apart from consulting services rendering the Russian investment banks are ready to provide the financing of M&A transactions if required", Mrs. Khrabrova marks. Meantime the positions strengthening of the Russian investment banks would take place on the background of the considerable volume growth of M&A market. "The market of the public offerings is agog, and therefore clients prefer to withdraw the IPO in favor of M&A", sums up Mr. Aganbegyan.

Investment banks rating at the M&A market by the volume of concluded transactions in 2007

Source: M&A Analytic Group of Mergers & Acquisitions magazine