One Equity, Russia fund team up on deal

The deal, led by a consortium which includes Russia’s sovereign private equity arm and trade buyer Cordiant, comes a week after One Equity announced its spin-off from JP Morgan.

One Equity Partners, the buyout subsidiary of JP Morgan Chase, has teamed up with the Russian Direct Investment Fund to invest in Voltyre-Prom. 

The investment was made alongside tire manufacturers Titan International and Cordiant. The consortium will become the controlling shareholder of Voltyre-Prom, with Titan taking over as its managing partner. The size of the transaction was not disclosed. 

Voltyre-Prom is the largest producer of agricultural and industrial tyres in Russia, for which it boasts 43 percent and 16 percent market shares respectively. The company produced around 1.35 million tyres last year. 

Voltyre-Prom’s new owners intend to develop the group further by modernising its operations, grow its specialty tyre product range, reduce imports by shifting production to Russia and expand internationally. 

The involvement of investors of such scale underlines the growth prospects in the Russian agricultural sector.

Kirill Dmitriev

“RDIF completed this deal alongside world class strategic partners from both the global industrial and financial sectors. The involvement of investors of such scale underlines the growth prospects in the Russian agricultural sector,” said Kirill Dmitriev, CEO of RDIF, in a statement. 

The deal comes shortly after JP Morgan confirmed plans to spin-off One Equity. The buyout division, which currently manages around $4.5 billion exclusively for JP Morgan, is set to begin raising a fund from external LPs, the US bank said last week. 

The move comes as US lenders face pressure to loosen their relationships with alternative assets to comply with new regulation, dubbed the “Volcker rule”, which restricts proprietary trading and risky investments. It echoes decisions by other financial institutions, such as Bank of America and Citigroup, to sell their private equity portfolios to raise fresh capital. 

JPMorgan has also been trying to sell its about $400 million limited partner stake in CCMP Capital Partners on the secondaries market — a sale driven by regulatory concerns.

The spin-off also comes amid a period of shake-up at JP Morgan. The bank has been striving to streamline its business and avoid potential conflicts in the wake of the “London Whale” scandal, which saw it accumulate more than $2 billion in trading losses last year. 

One Equity will continue to make investments for JP Morgan during the interim period, and manage the existing group of portfolio companies held on the bank’s behalf. It invests between $50 million and $250 million per transaction in North America, Europe, Asia and South America.  

RDIF was established in 2011 to make equity investments primarily in Russia. Its management company is fully owned by Vnesheconombank, the country’s development bank.