ALEXEY PANFEROV made his name at MDM Bank. Now he intends to use his reputation to raise $300 million.

Nowadays, we would say he was engaged in retailing. Previously they would have said that he was a hawker.

Former Deputy Chairman of the MDM Bank Board, Alexey Panferov, is an energetic man. He arrived on a night flight from Nice, where he had had talks with one of the partners. Then, after holding several meetings in Moscow in the morning and still looking quite vigorous, in the afternoon he is speaking excitedly to a Forbes reporter about a 100 page research report he has recently read on one of Russia’s home appliance retail networks. Nowadays Mr. Panferov is particularly interested in such reports. He recently switched from a spacious office at MDM Bank to a tiny space in a business center near the Moscow Garden Ring (Sadovoye) having, along with partners, established a management company which provides consultancy for private equity funds. Even the terse name of his new firm conveys energy — it is NRG (New Russia Growth).

At MDM, Mr. Panferov was managing the Investment department. His team was to focus on the fine detail of each company's business when preparing client's bonds and shares issues. "Our intention was to sell company business philosophy, rather than its debt or shares," explains Mr. Panferov. A couple of years ago he realized that, besides charging fees on transactions, there is also an opportunity to purchase stakes in analyzed companies, so as to sell after increase in capitalization. In early 2006, he started talks about his termination with the bank, and in July he and partners registered their own company.

Who are the other co-founders of NRG? A former Managing Director of MDM Bank, Andrei Dobrynin (who was also engaged for a few months with Alpha Bank), and Igor Nam, a Managing Director of private investment firm Premier Capital Limited. Shares are divided between the three partners almost equally, with an expectation that a fourth partner will join soon.

The first private equity fund managed by NRG will probably have received its first contribution from investors by the time this Forbes issue goes on sale. As of mid-September, the partners obtained consent from 12 investors, mostly private parties. Mr. Panferov does not disclose their names, yet says that the co-founders of the MDM Group, Andrei Melnitchenko and Sergey Popov are not on the list. The total planned volume of Volga River One Capital Partners fund is $200-300 million, and the first subscription was expected to raise $98 million. Do you want to join the fund named after the River? This can be done with a contribution of at least $5 million subject to a successful check on the source of the money. The fund is targeting ROI of at least 35% annually, though there is no guarantee against losses, as with in any fund.

How is Mr.Panferov doing at the new place? Changes and independence are nothing new for the 36-year-old financier. He has been making his living since high school selling just about anything, such as ‘seven melodies’ watches made in China. "You buy a bag of watches by weight," smiles Alexey Panferov, thinking about his first steps in the business. "The bags cost me 15 rubles a piece. In retail stores, this stuff was sold quick for 38 rubles, out of which three-eighty was the store's commission, and 34 rubles, 20 kopecks was ready cash." One person could not sell more than ten watches to one store, so groups were formed to distribute merchandise around the stores. One could buy watches from Yugoslavians in Belgrade Hotel (now known as ‘The Golden Ring’) across from the Ministry of Foreign Affairs: active trade was going on at a foreign-currency-only bar there, but Panferov did not deal in currency. A stock of watches was purchased for rubles from a broker. Nowadays, they would say “obtaining from a distributor and retailing.” In those days, though, the name was ‘a hawker’.

It appears that Panferov, the offspring of a good Moscow family, is a bit shy about his erstwhile business activities. His grandfather was the dean of the Textile Institute, and his grandmother head of Oktyabrsky School District Supervisory Board. Alexey graduated from a physics and math charter school with advanced English.

After finishing school, Panferov entered the Moscow Institute of radio engineering, electronics and automation (MIREA). In the early 1990s he was engaged in the wholesale business. In 1993 he graduated from the Institute and endeavoured for the second higher education at the Moscow Institute of International Business. Thereafter, he began working at the investment company Financial Service Center which later grew into Bank Zenit. At the beginning of 2002, Mr. Panferov moved to MDM Bank.

"We defined from the beginning who our clients are and what we have that our competitors don't," says Panferov about his transition to MDM Bank. His team was engaged in large transactions (such as placement of Gazprom Eurobonds, Moscow municipal ruble bonds, etc.), yet their ‘target audience’ was second category companies which had potential for high growth in the future.

What advice would Panferov give about investing money now? He sees good prospects in the food processing industry, IT companies, machinery manufacturing plants and banks. NRG plans to spend up to $50 million on two transactions per quarter. Obviously retail companies are preferred – Panferov and partners plan to allocate to them up to one third of the fund's investments. That's a significant amount. They just have to persuade investors to contribute this money.

Text: Pavel Miledin
Source: Forbes Magazine, October 2006