Sep 21

Digital Bank Tinkoff Organizer in First IPO

Stephen Bierman
Sep 28, 2021
digital bank
Image: Austin Distel via Unsplash

Tinkoff, Russia’s leading digital bank, hits a new milestone as it serves as an IPO organizer for the first time in Renaissance Insurance Group’s initial public offering, which aims to raise RUB 21 billion ($289 million).

Credit Suisse, J.P. Morgan and VTB Capital are acting as joint global coordinators and joint bookrunners while BCS Global Markets, Renaissance Capital, Sberbank and Tinkoff are acting as joint bookrunners of the offering, according to a statement from Renaissance Insurance. Tinkoff is the only digital bank among the book runners. Renaissance plans to list on the Moscow Exchange.

The role marks a next step in the evolution of Tinkoff, which is known for its highly developed digital financial and lifestyle ecosystem. Tinkoff said in April that it plans to go into equity and debt capital markets (ECM and DCM) advisory and focus on new economy companies that are close to Tinkoff and its customers in spirit. This includes companies that offer digital products and services in their respective industries.

Tinkoff’s ECM and DCM advisory services sit within Tinkoff Investments, Russia’s largest brokerage by the number of active customers. The digital platform serving retail investors has seen  explosive growth with the rise of retail investment in Russia, which has accelerated during the pandemic. Tinkoff’s ECM and DCM work is headed by Anton Malkov, former Managing Director of Sberbank CIB’s Global Markets Department.

Renaissance Insurance is Russia’s largest online policy provider. The insurer said in a statement that it plans to use the funds raised to finance digital investments, as well as growth and other business development.

Digital innovations differentiate Renaissance Insurance from competitors and drive organic growth, according to the company. Digitalisation runs through the group’s entire value chain, from distribution (direct online and indirect channels, as well as partnerships and digitalisation of traditional channels), underwriting and claims handling to back office and operational efficiency.

The Russian insurance market has grown faster than the global average, with a combined annual growth rate for gross written premiums (GWP) of 11% between 2010 and 2020. At the same time, the market remains significantly underpenetrated compared to other EMEA markets, indicating further potential for accelerated expansion, according to the Renaissance Insurance statement.

Tinkoff has been able to expand its long-held digital-only approach to retail banking into a competitive advantage when it comes to brokerage and investment banking services. This seems to be the logical next step, as retail investors tap into the markets via online platforms and companies raising capital are increasingly focused on digital capabilities.

The first foray into book running will be important for Tinkoff. If it can monopolize on its front-running digital position and its leadership in brokerage services for retail investors, then there will be many more such opportunities to come. The growth of online services, and the significant boost to these services provided by the pandemic, will only give this space more focus and attention.

Stephen Bierman

Stephen Bierman is a finance and energy reporter with over 15 years of experience, including at Bloomberg News and Energy Intelligence.

Tweets at: @StephenBierman1

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