Updated August 13, 2008

The largest French banking group – BNP Paribas – purchases the Russian group of companies – AntantaPioglobal.

The deal size can attain $70 million. However, the French have to spend more, as development of AntantaPioglobal retail business requires serious costs, experts forecast.

On August, 12, Pierre Rousseau, BNP Securities Asia chief executive officer (the broker branch of the largest French bank BNP Paribas), reported in Hong Kong about the prepared purchase of the Russian broker company.

In Russia's office of BNP Paribas confirmed the intention to amalgamate with the Russian broker capital, but didn't specify with which one exactly.

According to some information, it goes about the purchase of Russia's AntantaPioglobal Group of Companies, as its stockholders settle a deal with the French.

Two sources in the large investment companies operating in Russia confirmed this information, as well as a source in AntantaPioglobal. The Group chief executive Evgeny Kogan refused to comment saying the deal was confidential.

AntantaPioglobal Group of Companies was established in 2004 and comprises Antanta Capital Investment Company, Pioglobal Asset Management managing company, the Moscow fund center, and the Internet-broker NetTrader.ru. The Group core owner is Alexander Gaydamak, son of the businessman Arkady Gaydamak.

The ownership structure is not officially exposed.

But, according to some information, Alexander Gaydamak controls 98% of the Group, and Evgeny Kogan is the beneficiary of 2% of the Group stocks.

BNP Paribas SA is the largest bank in Europe and the fifth bank by size worldwide.

In Russia the bank develops corporate lending and retail services. As per data of early 2008, the bank assets totaled €1,7 trillion, market capitalization – €67,2 billion. As of early 2008, the broker branch – BNP Securities Services – managed assets of €834 billion.

AntantaPioglobal owners were trying to sell their asset since summer of the last year. They were holding talks with the South African Standard Bank, the Slovak fund Penta Investments, but the parties didn' t agree on a price. In May of the current year, when two independent directors joined Pioglobal Asset Management directors' board, in the Group management said they were preparing to hold IPO.

However, in terms of the negative market situation, the Group has changed the plans.

According to the information of a source aware of the deal, its sum totals about $70 million. One and a half year ago, the owners of Aton Investment Group have sold the broker business and the branch engaged in organization of IPO and M&A for $424 million to the Italian Unicredit. However, as opposed to Antanta Capital placed 106 by volume of operations with securities, Aton was in the Top 10 of the largest Russia's investment companies.

The broker business exactly, as well as a managing company, is of primary importance for an investor, marks the Bank of Moscow analyst Dmitry Khamrakulov.

According to the information from the open sources, the overall assets volume they manage is about RUR 3 billion ($125 millions). As a rule, for such business one pays 10-15% from the managed facilities, so, it is approximately $12-15 concerning Antanta. The major deal sum is explained by the Internet-trading and the Moscow fund center present in the Group.

"The French receive a rather good ground for their business in Russia, and the price of $70 million is sound", considers Mr. Khamrakulov.

However, some market participants don't consider such assessment as an adequate.

"Up to now, the foreigners were interested in the broker business in Russia only in case its part touches on service of institutional clients, organization of M&A deals, and IPO organization", says Zerich Management Company chief executive Alexander Scheglov. "The retail – mutual funds and the Internet-trading – is at the early development stage in Russia now, and it is an automatically unprofitable type of business.

And the foreign stockholders have to spend huge facilities to develop this segment".