Volzhski Universalny Bank (“VUB”) was acquired in May 2008 through Flexinvest Limited (“Flexinvest”), a wholly owned subsidiary of Aurora Russia for a consideration of £5.1 million (RUR 237 million). Additional funds of £1.2 million (RUR 57 million) are to be invested into the bank by Flexinvest to cover post-acquisition infrastructure costs and fund ongoing operations. VUB will provide Aurora Russia with a retail banking platform that will focus primarily on retail mortgages, providing synergies with Kreditmart, the loan supermarket owned by Aurora Russia.

In October 2008, Volzhski Universalny Bank was renamed Flexinvest Bank and its headquarters were moved from Samara to Moscow.

Increased presence in the retail financial services market

The acquisition of the banking platform enables Aurora Russia to increase its presence in Russia’s growing retail financial services market by distributing Flexinvest Bank’s retail products through Kreditmart. Kreditmart will offer Flexinvest Bank retail products through its distribution network of loan shops in Russia.

Strong growth in the Russian Banking sector

The Russian banking sector has demonstrated consistent growth for seven straight years. From 1999 to 2006, the market has seen CAGR of 123% for the retail sector (according to the Central Bank of Russia statistics). However, despite the global financial crisis, there still remains considerable potential. The continuing growth of the Russian economy and a stable political situation should provide a favorable foundation for further growth. The low penetration of financial services means there continues to be good growth rates and attractive profitability. As banking reforms gradually take place and take effect, the significance of the sector within the economy is growing and there is still a rising demand for banking products and credits. The Russian retail banking market has been one of the fastest-growing sectors in emerging markets.

Visit the website of Flexinvest Bank: www.flexinvest.ru

Return to Aurora’s Russian investment fund portfolio