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Swedish fund to invest in Russian debt collector

Dmitry Zhdannikov
27th May 2009

Bad debts have emerged as one of the key problems for the Russian economy as it enters its first recession in a decade. The level of bad loans is expected to soar to as much as 20 percent in 2010, potentially erasing the profits of the entire banking sector.

Debt collection agencies are set to benefit, and banks and companies have already started auctioning off packages of non-performing loans.

On Wednesday, Swedish fund Mint Capital said it would invest $5-$15 million to buy 25 percent plus one share in Stolichnoye Kollektorskoye Agentstvo, allowing it to take a seat on the board.

"Negotiations began before the onset of the financial crisis and were completed successfully," Vladimir Zaluzhsky, Mint Capital's investor relations manager, told Reuters. He said the agency has $320 million worth of assets under management, making it Russia's third largest player. The agency was not immediately available for comments.

"The agency's portfolio is wholly individual debt although there are plans to move into the non-banking sectors -- cellular communication companies, utilities companies, communal services companies, insurance companies etc," he added.

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