Delta completes second transaction in a week

Moscow-headquartered Delta Private Equity Partners has sold Russia’s DeltaCredit Bank, which specialises in mortgage lending, to Société Générale for an undisclosed amount in a transaction expected to complete in the next few months.
 

Our investors are not in these businesses in perpetuity, they want to see a return in a five year time frame and it was a healthy time to sell. Patricia Cloherty, chairman and CEO, Delta Private Equity Partners

Founded in 2001 by the US Russia Investment Fund and managed by Delta Private Equity Partners, DeltaCredit Bank has 128 employees and originated over $200 million (€160 million) worth of mortgages in Russia.
 
The bank was originally set up through a “nominal amount” license acquisition from JP Morgan and effectively started from scratch, according to Patricia Cloherty, chairman and CEO of Delta Private Equity Partners.
 
Cash from the transaction will be returned to both the US Russia Investment Fund and the more recent Delta Russia fund.
 
“Financial institutions are not classic venture investments,” said Cloherty in an interview with PEO. “You need deep-pocketed partners to do that, and in the last 18 months, there have been a lot of offers from various groups in both Russia and outside. Our investors are not in these businesses in perpetuity, they want to see a return in a five year time frame and it was a healthy time to sell.”
 
Cloherty added that the financial services market in Russia is massively undeserved but growing, with around 150,000 credit cards being used in a nation of over 143 million people, and just over 10,000 mortgages from a population of 10.5 million in Moscow. For that reason, partnering, selling to Société Générale made sense.
 
“It was our concept to sell DeltaCredit to a financial institution that would, from a capital and knowhow standpoint, roll out in regions in Russia,” said Cloherty.
 
The DeltaCredit Bank acquisition complements Société Générale’s presence in Russia, which includes universal banking (Banque Société Générale Vostok) and consumer credit (Rusfinance).
 
The transaction follows a busy several months for Delta. Last week, Basic Element, a holding company of aluminium magnate Oleg Deripaska, announced that it had bought Delta Private Equity Partners’ 25 percent stake in Russian cable firm National Cable Networks (NKS) for an undisclosed amount.
 
In August 2004, Delta sold consumer bank DeltaBank to GE Consumer Finance for a reported $100 million (when Delta was known as Delta Capital Management), and held a final close of its latest, $120 million fund in June 2005.