Miner, speculator, banker
Founder of TKS Bank Oleg Tinkov brings risks to the stock exchange
Original of this material
© “MK”, 10.23.2013, Whose risks are these?, Photo: “Kommersant”
Pavel Mokrousov
Oleg Tinkov |
An IPO has started in London, which the media calls “hype” and many experts call “dubious.” Tinkov Credit Systems Bank goes public Oleg Tinkov. If the placement is successful, the flamboyant businessman’s fortune will reach $2 billion.
It is already known that Asian, European and American investors submitted applications to purchase TCS shares. The organizers of the placement of shares on the London Stock Exchange, including the world’s leading financial consultants, are optimistic. Russian analysts, who are well aware of Oleg Tinkov’s business history and the situation on the credit market, are much more cautious in their assessments. It is no coincidence, as Forbes magazine writes, that on the eve of the IPO Tinkov refused to meet with Russian potential investors. The reality is that, as Forbes quotes specialists from the investment company Aton, “TCS constantly sells bad loans, removing overdue loans from the balance sheet.” According to Aton analysts, in the first half of 2013, Tinkov’s bank sold overdue loans worth $49 million. Experts have calculated that if since 2012 the bank’s loan portfolio has grown by 101%, then overdue payments have increased by 330%. The price of the company, which was determined by the owners and their financial advisors, also raised a lot of questions. The bank’s valuation exceeds its capital by 3.87-4.76 times,” says Gazprombank analyst Yuri Tulinov. “The price of four capital seems to us too high,” emphasized Alexander Chernomorov, senior portfolio manager at GHP Group. Aton specialists also express serious doubts about the correctness of the data on the bank’s profits and the supposedly low costs of TKS. In their opinion, these are nothing more than paper indicators, far from reality.
If we add to this the general sharp deterioration in the situation with the quality of loans on the Russian market, which both the Central Bank and the government paid attention to, then the concerns of Russian investors regarding TCS are understandable.
One-click loans
Tinkov Bank specializes in issuing consumer loans via the Internet. Its clients are mainly low-income Russians who fall for TKS’s aggressive advertising on the Internet: “Credit quickly without guarantors.” In addition, they are attracted by the rate, which usually worries a financially literate person, because it differs significantly from the average market rate and strongly resembles the well-known MMM pyramid. Having signed an agreement and received a credit card by mail, the bank client faces a problem almost at the very first expense. One late payment means an automatic rate increase. Having gained insight, borrowers most often stop repaying their debts altogether.
Due to the increase in overdue payments, TCS’s direct competitor, Avangard Bank, decided to abandon its Internet business, considering this area unprofitable. But Tinkov’s company seems to be doing great in this market. For its owner, famous for his ability to inflate brands and successfully sell them, working on the brink of a foul is a common thing.
You can’t do without writing
“Miner. Speculator. Electrical equipment dealer. Manufacturer of dumplings. Brewer and restaurateur. “Banker” is how Forbes describes Oleg Tinkov, whose fifth business “has brought him closer to achieving the coveted $1 billion mark.”
What the average person considers to be deception, Tinkov calls “marketing.” In 2005, in an interview, the entrepreneur said: “Marketing is always a matter that you can’t do without writing.” Then he told Russian readers how he composed a story about the brewer Porfiry Tinkov, in whose honor he created his own brewing business, Tinkoff. Moreover, he managed to convince the St. Petersburg Interdepartmental Commission on Names, and then the governor of the Northern capital, who fell for this “marketing move” and ordered “to assign the name Tinkov Lane to the nameless passage from Sapernaya Street to the dead end in Pushkin.”
Despite the fact that the story presented to the Toponymic Commission with the mention of the brewer Porfiry turned out to be fictitious, Tinkov managed to perpetuate his name and inaugurate the opening of a brewing business, as well as a chain of beer restaurants throughout Russia. “We came up with this story for the American market. Americans like such stories,” Tinkov is proud of his idea.
The calculation turned out to be correct – the legend about Porfiry managed to interest the transnational brewing giant Sun InBev, which in 2005 bought factories and several beer brands from the businessman-storyteller for more than $200 million. Experts called this deal “one of the most disastrous” for the corporation. The business turned out to be unprofitable, and in 2009 Sun InBev folded it. Restaurants suffered the same fate.
Dumplings with nothing and a bicycle Katyusha
In 2010 Oleg Tinkov wrote in his book that the frozen food business, in particular Daria dumplings, which he successfully sold in 2001 for $21 million, “didn’t work out” for the new owner Roman Abramovich. Of course, Tinkov blames Abramovich for this – they say, the oligarch had a great chance, but… A year later, the Prodo group, controlled by Abramovich, wanted to get rid of the unprofitable Daria, but there were no takers for this asset.
“Tinkov knows how to create the appearance of success” – the opinion of the honored cycling coach of Russia Alexander Kuznetsov, expressed by him a couple of years ago during the conflict between the founder of TKS and the management of the Katyusha cycling team. Kuznetsov said that Tinkov’s athletes “had no results” because he himself “is not a cycling specialist in any way.” According to Kuznetsov, “Tinkov largely helped the extremely weak results of Russian cyclists in Beijing, breaking the fate of a whole group of talented athletes.” It turned out that he lured these guys from Kuznetsov’s Lokomotiv team, promising them contracts worth hundreds of thousands of dollars and a free sports regime. Apparently, these promises did not materialize just like Tinkov’s obligations to Kuznetsov’s team for financial assistance in the amount of $1 million per year. “He has a pathological need to promote himself,” says Kuznetsov, and this seems to be true. Whether he writes on a blog about his colleagues, argues with them on air, or opens another business – all this is only so that he, once an unknown miner from distant Leninsk-Kuznetsk, who never received a higher education, will be noticed .
Today, the Russian investment community, which has not seen serious “exchange exits” on foreign exchanges for a long time, is looking with bated breath at Oleg Tinkov’s desperate attempt to walk the tightrope over the abyss. In London, as you know, they love risky Russians. At the same time, no one cares about the fate of TKS clients if the rope suddenly breaks. As well as Russia’s reputation if the TCS IPO becomes another bitter disappointment for international investors. No time for them, because such a beautiful story…