Delta sells Russian bank to GE

GE Consumer Finance (GECF), the consumer lending unit of the General Electric Company, has completed its first significant investment in Russia, by agreeing to buy DeltaBank from Delta Capital Management (Delta).

Financial terms of the deal were not disclosed although reports suggest that Delta received $100 million (€82 million) for its 100 percent equity stake. Patricia Cloherty, CEO of Delta said that on top of the $100 million purchase price, a  $50 million credit line had helped return “a substantial multiple to our cost”.

DeltaBank was founded in 2000 with a reported $20 million investment from the US Russia Investment Fund and has become one of the leading issuers of credit cards in Russia with branches in seven regions.

Commenting on the transaction in a statement, managing director Kirill Dmitriev said: “We expect the consumer finance market to grow substantially next year and other acquisitions in this sector to follow. Foreign strategic investors are increasingly investing in Russia’s non-oil sectors.”

The transaction is Delta’s fifth successful divestment of a portfolio company in the last ten months according to the company. In November, the firm sold Russian leasing company Deltaleasing to fellow private equity firm Baring Vostok Capital Partners, delivering an IRR of 40 percent.

Delta is focused on identifying and investing in emerging growth companies in Russia through its US Russia Investment Fund, which was initially capitalized by the US government. The fund focuses on high growth consumer sectors such as financial services, consumer products and services and TMT. Established in 1994, the fund has invested over $300 million in more than 40 companies in Russia.