26 June 2019
Renaissance Capital holds its 23rd Annual Russia Investor Conference

Renaissance Capital, a leading emerging and frontier markets investment bank, held its 23rd Annual Russia Investor Conference on 24-25 June 2019 in Moscow. 

With strong attendance by more than 250 guests, including representatives of leading Russian companies and top international and local investors (with total AuM of $2trn+), the conference hosted c. 500 one-on-one meetings. In addition to individual meetings, the first day of the conference included two roundtables – on an ESG-based approach (environmental, social and governance) to investments and on pace-making sectors of the Russian economy. 

The ESG roundtable highlighted the implications of ESG factors for company valuation. Investors discussed ways to integrate ESG in asset selection and portfolio construction, while corporates shared how improvements in ESG can have a positive impact on performance and valuations. The panel was moderated by Daniel Salter, Head of Research Eurasia, Head of Equity Strategy, Renaissance Capital. 

Daniel Salter said: “We are happy that we have once again delivered a world-class investor conference in Moscow, bringing together Russia’s leading corporates and major global investors. ESG was a new topic on the agenda this year. Renaissance Capital has produced thought-leading research on the subject, and the level of engagement of corporates and investors during our roundtable session shows how important ESG is becoming. The Global Sustainable Investment Alliance estimates that some $30.7trn of global assets are managed today under some form of responsible investing strategy. And we were pleased to see that Russian companies are progressively adopting ESG metrics.” 

The ESG roundtable gathered speakers representing companies from different sectors of the Russian economy and major investment funds. Below are their keynote comments: 

Peter Elam Håkansson, Partner, Chairman and CIO, East Capital: “For us the most important thing has always been to know who owns the business, when it comes to sustainable investments and ESG. When we invest globally or in Russia we want to know who is behind companies. In terms of the other two ESG components, I believe that if the G works, the E and S come naturally. What we see now is that demand from the Scandinavian client base is really ramping up in terms of ESG investments. This is a clear trend.” 

Vitaly Nesis, Chief Executive Officer, Polymetal: “We started our ESG effort to predict, manage and ultimately avoid value destruction. The current trend when portfolio and institutional investors become more and more interested in this area of our activity is a significant reinforcement to our previously formulated strategy.” 

Denis Spirin, Corporate Governance Director, Prosperity Capital Management: “ESG is both about better returns and lower risks. When you select a company for your investment, you have to check it from a corporate governance perspective – that is to avoid respective risks, and then – when you become a shareholder – if you deliver to make improvements in corporate governance, you may expect better returns.” 

Darya Fadeeva, Head of IR, EN+: “We see that indeed ESG currently becomes more and more important for investors worldwide. For EN+ Group given recent turbulence it is a particular focus to deliver clear and consistent messages with respect to our low-carbon, vertically integrated business model covering E and S, as well as to walk investors through the substantial governance changes that the Group went through over the last 18 months. To this end we established a dedicated team in our IR department, whose sole focus is ESG strategy development, investor engagement and making sure best-in-class reporting practices are observed at all times. This team works with our sustainability and business development management and reports to the HSE committee of the EN+ Board. We further enhanced our periodic IR disclosures that are shared quarterly with investors. To go one step further EN+ has hired an ESG consultant, which is, in tandem with the corporate brokers, receiving regular feedback from investors, examining all the initiatives in the market and recommending the most relevant for us in this constantly evolving topic.” 

Vasiliy Mozgovoy, Assistant to CEO on Corporate Finance, Tatneft: “Historically, we were considered as more prone than our peers to spend on social infrastructure. But over time, people started to appreciate that we were building social capital, contributing to the human capital part. The ultimate beneficiary of the S aspect is the workforce. And this becomes especially relevant as we compete for talent and also need to make an effort to retain talent. It’s very relevant for the younger generation because of increasing mobility and on top of that it’s been a bit challenging to attract young people into the oil industry these days. The social capital that we build is very important as an advantage in our business.” 

Blokhin Boris, Head of Cash Equities Department, Moscow Exchange: “Over the past five years, we have made several important steps to improve corporate governance in companies with stocks and bonds listed on the MOEX. We implemented a listing reform, setting a number of mandatory requirements and ratios. We have implemented solutions like electronic voting to increase the involvement of shareholders. Also, as a publicly-traded company ourselves, we believe that our experience can become a basis and provide guidelines for other Russian companies to make their first steps in ESG.” 

Another roundtable, “Russia’s Five Pace-Setting Sectors”, featured Russia’s most attractive sectors – agriculture, financial services (fintech), healthcare, retail and IT. The panel started with a brief macro overview of the Russian economy by Petr Molchanov, Head of Investment Banking, Russia & CIS, Renaissance Capital. 

Petr Molchanov said: “Today, our roundtable hosts the fastest-growing Russian companies. These are the true champions, focused on domestic demand and fueling further development of the Russian economy. We appreciate their involvement in discussions and readiness to share experience and aspirations.” 

The discussion included representatives of market-leading companies, who shared their view of the current situation and respective sector outlook, as well as their growth plans. 

Oliver Hughes, Chairman of the Management Board, Tinkoff: “We believe that our growth upside mostly relies on people, the size of the client base. In the next 3-4 years, we are looking to reach the 20-mn client threshold. However, it is important to maintain balance and be responsible. We avoid increasing credit amounts and tenors for clients at the same pace as some banks do – this is key to prevent toxic loans.” 

Maxim Basov, Chief Executive Officer, Rusagro: “We see growth opportunity in improving productivity in crops and meat production by 20%. Another growth driver will be digitalisation, which will not require much capital. Also, against the backdrop of saturated domestic demand, we are looking to increase exports, mainly to China and Africa.” 

Evgeny Rimsky, Member of the Management Board, Vkusvill: “Our company has benefited from the transformation of the retail sector, both in Russia and globally. Consumer preferences have switched towards neighbourhood stores. Coupled with conscious consumption and healthy lifestyles, this has notably disrupted existing business models in the sector.” 

Andrey Yanovsky, CEO, European Medical Center: “Our strategy calls for growth areas rather than growth points. With government spending on healthcare decreasing steadily that opens up more opportunities for private healthcare players. We invest in expertise and digital platform and consistently increase coverage of the target audience.”

Rafael Abramyan, CEO, Rambler Group: “The most recent equity investment deal signed with Sberbank will help Rambler grow with accelerated pace through massive investments in content, big data solutions and personalisation of media products. As the number one online media holding in Russia, we are going to expand our products and services even further through synergies with Sberbank’s online and offline outlets. Our unique set of businesses has allowed us to avoid direct competition with other Russian IT majors so far. However, going forward, tough competition for users is inevitable.”

One of the roundtable speakers was Andrey Dubovskov, CEO, Chairman of the Management Board, Sistema. Sistema’s investment portfolio includes stakes in companies from various sectors – telecommunications, retail, timber processing, agriculture, high technology, banking, real estate, healthcare services and hospitality. 

Andrey Dubovskov shared his sector-wise view, saying: “I am convinced that in the future – not so distant – we will see convergence of many markets and sectors. Today, banks and providers of financial services are growing their eco-systems, which are destined to become part of something even greater.” 

Renaissance Capital’s Russia Investor Conference is one of the Firm’s major regular investor events, in addition to the North Africa Investor Conference, the Pan-Africa Investor Conference and the East Africa Investor Conference. Renaissance Capital’s conferences, as well as its bespoke investor trips, NDRs and capital market days, provide unparalleled investor and corporate access and networking opportunities, and attract top international and local investors, corporates and thought leaders.

* ESG - environmental, social and governance criteria