30th Nov 2006 07:02
Aurora Russia Limited30 November 2006 30 November 2006 Aurora Russia Limited to acquire a 26% stake in Unistream, one of the leadingmoney transfer companies in Russia Aurora Russia Limited (the "Company" or "Aurora Russia"), the AIM-quotedinvestment vehicle established to make equity or equity-related investments insmall and mid-sized private companies in Russia, announces that it has agreed toinvest the ruble equivalent of $20 million (£10.4 million) in cash for a 26%stake in Unistream Bank ("Unistream"), part of the UniAstrum Group. Unistream isone of the leading money transfer companies in Russia with a market share,estimated by the Directors of Unistream to be approximately 25% of the volume ofmoney transfers made to and from Russia during the first half of 2006. This will be the third investment made by Aurora Russia since its admission tothe AIM Market in March 2006 having raised £75 million. Aurora has now committedor invested a total of £30.5 million (1) and the Company is actively pursuingfurther investment opportunities in the business, consumer and financialservices segments in Russia. About Unistream UniAstrum Bank ("UniAstrum") began its money transfer operations in 2001 underthe Unistream brand. According to RosBusinessConsulting, UniAstrum is one ofRussia's fastest growing banks and is now ranked as one of Russia's top 10 banksin terms of number of branches. In July 2006, UniAstrum set up a new companynamed Unistream which was granted a separate banking license in August 2006allowing it to offer money transfer services in Russia. UniAstrum is in theprocess of transferring its money transfer assets including cash desks and itsagency agreements to Unistream comprising 75 cash desks in Russia with 145service points located within UniAstrum's branch network. Through its agencyagreements Unistream also operates through over 200 agents with approximately25,000 points of sale in over 80 different countries processing over 1,500,000transactions in the first 10 months of 2006. Unistream has approximately 200employees which are currently being transferred from UniAstrum. Assuming that UniAstrum had fully demerged Unistream as a separate company atthe beginning of the year ended 31 December 2005, on a pro forma basis theUnistream business would have transferred a total volume of $755 million, anincrease of almost 200% on the prior year, earning pro forma revenues of $9.4million (2). On the same basis for the 10 months ending 31 October 2006, Unistreamwould have transferred a total of approximately $1.4 billion and it is estimatedby UniAstrum that the volume for the year ending 31 December 2006 will beapproximately $1.9 billion. Revenues for the Unistream business on a pro formabasis for the full year ended 31 December 2006 are estimated to reachapproximately $26 million (2). UniAstrum has been investing aggressively in theroll-out and growth of Unistream. Now that Unistream is a standalone business,it will continue to carry out a significant level of investment over the nextfew years. This investment is likely to affect the profitability of Unistream inthe short term as the business grows. UniAstrum/Unistream is the founding member of the International Association ofMoney Transfer Networks ("IAMTN") which is a worldwide money-services thinktank. Deloitte has acted on behalf of Uniastrum as its exclusive financial advisor. About the money transfer market in Russia The Central Bank of Russia's ("CBR") official statistics report that Russianinbound/outbound remittances have grown at a compound annual growth rate of 56%from 2003 to 2005. According to industry statistics, there are approximately 15 million immigrantsfrom the Commonwealth of Independent States ("CIS") working in Russia who, inaggregate according to Central Bank's statistics and industry experts'estimates, sent between $3-6 billion to their home countries last year. TheDirectors of Aurora Russia believe that as more and more businesses in Russiaembark on a regional development strategy, more jobs will be created in theregional cities of Russia, creating attractive opportunities for additionalimmigrants. This in turn, creates an excellent growth opportunity for a moneytransfer operator with a regional coverage, such as Unistream. Investment details Subject to conditions precedent, which include approvals from the Central Bankof Russia and the Federal Antimonopoly Committee, and the transfer ofsubstantially all of the money transfer assets of UniAstrum to Unistream, and arestatement at completion, of the representations and warranties given atsigning, Aurora Russia will acquire a 26% stake in Unistream for a totalconsideration of $20million in cash (£10.4 million). Of this amount, $13.6million (£7 million) will be used to subscribe for new shares in Unistream and$6.4 million (£3.4 million) will be paid to UniAstrum to purchase existingUnistream shares. Aurora Russia will also be granted certain exit rights such asdrag along and tag along rights and the ability to appoint an investment bank tosell the business in the future (for example, by way of an IPO). Aurora Russiaalso has a put option to sell its stake in Unistream to UniAstrum at marketvalue as determined by an independent appraiser in the event of a change ofcontrol of UniAstrum. The closing date for the investment ("Closing") isanticipated in the first quarter of 2007. On Closing, John McRoberts, a Director of Aurora Russia, will join the UnistreamBoard. Commenting on the investment, James Cook and John McRoberts, two Directors ofAurora Russia Limited, said: "Unistream is one of the market leaders in the money transfer business inRussia. Its strong market position, banking license and successful proprietarysoftware put Unistream in an extremely strong position to capitalize on thestrong growth in this sector in Russia." Suren Hayriyan, President of Unistream, said: "We consider the finalisation of this deal to be the result of all the work themanagements of UniAstrum and Unistream have undertaken over the last five years.Aurora Russia is the perfect partner to help us to increase transaction volumes,further develop a solid and efficient service point network and establish thesystem as a truly international money transfer system. "Over a five year period we have built the business into one of the marketleaders in Russia where our market share is now approximately 25 percent. We arecurrently operating through over 25,000 service points in over 80 countriesaround the world and the partnership with Aurora Russia will ensure that wecontinue our progress towards a global market share target of five percentwithin 10 years." Enquiries Aurora Russia LimitedJames Cook, Moscow +7 495 580 9749John McRoberts, London +44 20 7484 4028 Financial Dynamics +44 20 7831 3113Giles Sanderson/Ed Gascoigne-Pees Notes to editors: Aurora Russia Aurora Russia floated on the AIM Market of the London Stock Exchange on 24 March2006. The Company was established to make equity or equity related investmentsin small and mid-sized private Russian companies focused on the financial,business and consumer services sectors where the Directors of Aurora Russiabelieve there is potential for growth together with viable exit opportunitieswithin two to four years of making such investments. The Company intends toprovide its investee companies with the necessary capital to continue to expandand develop. Aurora Russia shall also provide hands-on operational support todeliver significant step changes in performance and value creation. Aurora Russia will target companies with enterprise values of up toapproximately £100 million and will seek to secure blocking or controllingstakes (generally in excess of 20%) and board representation in each portfoliocompany. It is anticipated that each equity investment will typically be between£5 million and £25 million. (1) Based on a USD/GBP exchange rate of 1.94(2) Due to the fact that the Unistream business is currently being demerged fromUniAstrum, it has not been possible to extract a meaningful income statement below the revenue line or balance sheet for the year ended 31 December 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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