Russian private equity firms may merge

Delta and UFG have moved into the same office and are ‘collaborating on deals’. No decision has been made regarding a potential merger of the two firms, according to chairman and chief executive of Delta, Patricia Cloherty.

Delta Private Equity Partners, a Russia-focused private equity firm, has “co-located” with UFG Private Equity, the private equity arm of UFG Asset Management.

With the co-location the two firms are “collaborating on deals” said Patricia Cloherty, chairman and chief executive of Delta Private Equity Partners, in an interview.

Patricia Cloherty

When asked whether the move was a precursor to a full merger of the two firms, Cloherty said: “A merger may be in the future, but no analysis of that has been done, so certainly no decision has been made. Right now it’s an academic proposition.”

The two firms have operated closely for the past five years. UFG Investors – a group consisting of several of UFG partners – is one of the largest limited partners in the $120 million Delta Russia Fund raised in 2004.

Last year UFG Asset Management lost its founder and leader, Boris Federov. The prominent Russian economist, businessman and former finance minister died at the age of 50 in November. His son, Pavel, is currently an associate in Delta's investment team.

Right now [a merger] is an academic proposition.

Patricia Cloherty

As reported previously on PEO, both Delta and UFG began fundraising last year, each seeking to raise $500 million funds.

In an interview earlier this year with sister publication Private Equity International magazine, Cloherty discussed how the financial crisis had shifted the private equity landscape in Russia.

“Right now there are a lot of variables in motion, including currency devaluation, the price of oil, interest rates, bank lending and government bail outs […] There may be some consolidation among private equity firms, but that’s healthy,” she said.

In related news, Cloherty, a former co-chairman of private equity firm Apax Partners, was earlier this month elected to the board of directors of the NYSE Euronext, the group that operates the New York Stock Exchange and Euronext bourses.