Cartesian, RDIF up stakes in Moscow exchange

Cartesian Capital Group and the Russian Direct Investment Fund will own 2.5% and 2.7% stakes, respectively, in Russia’s Moscow Exchange MICEX-RTS.

New York-based Cartesian Capital Group and the Russian Direct Investment Fund will increase their stakes in Russia’s Moscow Exchange MICEX-RTS by purchasing additional interests from UniCredit Bank.

Cartesian, which first backed the MICEX-RTS in May, will own a 2.5 percent stake in the exchange following completion of the transaction. RDIF, the $10 billion state-backed vehicle designed to promote foreign direct investment into Russia by acting as a co-investor on big deals, acquired a 1.25 percent stake in MICEX-RTS alongside the European Bank for Reconstruction and Development in January. RDIF is will increase its stake to own 2.7 percent of the exchange.

“The exchange is part of and will benefit from the overall development of the Russian capital markets and the desires and efforts of the Russian government to make Moscow an international financial center,” Cartesian managing partner Peter Yu told Private Equity International. “It’s seen and functions as an attractive portal for capital for local businesses. The stronger the exchange will be, the stronger the Russian economy will be.”

Cartesian, which has been an active investor in emerging markets but has no fixed geographic allocation, focuses on opportunities created by “large-scale forces driving global economic change” and market dislocations caused by “macroeconomic events, sectoral realignments, corporate or family reorganizations, or external shocks”, according to the firm. Cartesian will invest from both its $1.05 billion Pangea One fund and its Pangea Two fund that launched in 2010 and is targeting $1.3 billion.

“There probably are too many stock exchanges in the world, so I think we have seen and we will continue to see global consolidation,” Yu said. “I think that's a pattern that's going to continue.”

The investment in MICEX-RTS marks RDIF’s third since its formation in June 2011 and is part of a long-term strategy to promote the development of Russian capital markets and foreign direct investment into Russia.  RDIF is mandated to match each of its investments with that of an international co-investor, primarily targeting equity investments in Russian businesses.

“[T]ogether with Cartesian and the EBRD we look forward to supporting the exchange as it continues to grow and develop,” RDIF chief executive officer Kirill Dmitriev said in a statement.”

Cartesian Capital was founded in 2006 by Peter Yu and the senior management team of AIG Capital Partners and manages more than $2 billion in capital. The firm has offices in New York, Shanghai, Sao Paulo, Vienna, Warsaw, Bucharest and Bermuda.