Banking giants develop a relationship
Sberbank intends to acquire a major stake of 51 per cent in DB Development, currently held by Strabag and Dmitry Garkusha, General Director of DB Development. The deal will be completed by the end of 2010.
DB Development was formed as a joint venture by Deutsche Bank and the Austrian construction holding Strabag to construct infrastructure projects in Russia and the CIS.
Joerg Bongartz, Chairman of the Board of Deutsche Bank and a member of the Board of DB Development welcomed the deal, saying that the Sberbank’s participation in DB Development’s business will expand the company’s opportunities on the market.
“We are glad that, as a result of this deal, a very powerful development firm was set up, the competitive advantages of which are built on Sberbank’s market presence, the significant global experience of Deutsche Bank and DB Development’s know-how in development and structuring in the real estate sector,” Bongartz said.
The sides have signed a memorandum of intent on the sale of a controlling stake, but the amount of the deal has not yet been revealed.
According to an earlier announcement by the Strabag representative Diana Klein in an interview with Dow Jones, the deal has been valued at €1 million.
Klein added that the deal presents good opportunities for the developer according to the current projects being suspended due to financial problems.
“The concern has decided to sell its stake in DB Development because of funding problems. And with the help of the Sberbank all potential projects can be frequently financed and realized,” she maintained.
The leading Russian banks already have experience in the acquisition and management of development companies’ assets, and Andrei Stroev, head of the Real Estate and Administration Department at Sberbank, noted that this type of alliance will provide both sides with good prospects and profitable projects.
“The co-operation of Sberbank, the largest Russian bank, and Deutsche Bank, top-ranked leader in the global capital markets, on the platform of DB Development opens new opportunities for the Russian Real Estate market, where developers, although having teams of professionals and interesting projects, sometimes do not have the necessary capital base for their implementation as the crisis significantly influenced this sector,” said Stroev. “Indeed, this deal on acquiring the control stake of DB Development is an extraordinary and interesting solution.”
Konstantin Kovalev, Managing Partner of Blackwood, follows another side of the story, saying that Sberbank has acquired a large number of development assets during the crisis that require further investments. Kovalev adds that the investments can be allocated with the help of Deutsche Bank’s direct access to cheap funds.
“Sberbank will receive a share in a company whose shareholders – Deutsche Bank – have access to long-term and low-cost Western money,” Kovalev observes.
According to Dmitry Garkusha, General Director of DB Development, the company aims to improve the business and conquer leading positions in the development sector with the support of two banking giants.
“We are glad that, as a result of our co-operation with Sberbank and Deutsche Bank, we signed the agreement on the deal, which allow us not only to use our innovations and technology, but also the extensive experience of the both banks. We are confident that the synergy of a Deutsche Bank and Sberbank co-operation will positively influence the Real Estate market and allows DB Development to reach the leading positions in the areas of fee-development and attracting financing,” Garkushka concluded.