Aurora to exploit growth in Russian money transfers

Aurora Russia, an AIM quoted investment vehicle, has invested $20 million in cash for a 26 percent stake in Unistream Bank, a money transfer company that accounted for a quarter of all money transfers made to and from Russia in the first half of 2006.

According to Aurora director John McRoberts, most of Unistream’s business is accounted for by the 15 million immigrants from the Commonwealth of Independent States (CIS) who now work in Russia.

McRoberts cited Moscow in particular as a place “where a lot of immigrants go to work on construction sites”. He said the average value of money transfer completed by a Unistream client is around $500.

According to statistics from the Russian Central Bank, immigrant workers sent between $3-6 billion to their home countries last year. The Bank also reported that transfers both into and out of the country had grown at a compound annual growth rate of 56 percent from 2003 to 2005.

Unistream was launched in 2001 as a division of UniAstrum Bank, which is one of Russia’s top ten banks by number of branches. UniAstrum decided earlier this year to demerge Unistream and at the same time bring in a professional investor – which is where Aurora came in.

Said McRoberts: “They want to float the business in two years time and wanted our expertise in the run up to the IPO”. UniAstrum has retained a 74 percent stake in the business.

Aurora Russia listed on London’s Alternative Investment Market in March 2006 and raised £75 million for investment in small and mid-sized companies in Russia. At the time, the firm said it would take around 18 months to deploy the money. So far, it has invested a total of £30.5 million in three deals.