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Swedish Fund to Invest; Debt Collection Agency

A private equity fund in Sweden have declared their intention to buy a stake in a Russian debt collection agency.

The announcement was made on Wednesday and is the first foreign move in the sector since the onset of bad debt and economic crisis gripped the nation.

The Russian economy is entering its first recession in over a decade, and bad debts have emerged as a one of the key factors in the problems that the Russian economy faces, primarily factored down to bad loans. As the level of bad loans continues to soar, it is expected to hit a level of 20% of loans being bad loans in 2010, which could, potentially, erase the profit of the entire banking sector.

As a result, banks and companies have already started to auction off packages of non-performing loans, with debt collections agencies in particular set to benefit.

Mint Capital, the Swedish fund in question, said it would invest $5-$15 million to purchase 25% plus one share of Stolichnoye Kollektorskoye Agentstvo, which would allow them to take a seat on the board.

Speaking to Reuters, Mint Capital’s Investor Relations Manager, Vladimir Zaluzhsky said “Negotiations began before the onset of the financial crisis and were completed successfully regardless of the falling valuations due to the crisis.”

Mr Zaluzhsky also said that debt collection agency had $320 million worth of assets under management which makes it Russia’s third largest player.

“The agency’s portfolio is wholly individual debt although there are plans to move into the non-banking sectors — cellular communication companies, utilities companies, communal services companies, insurance companies etc,” he added.