Russian credit card entrepreneur Oleg Tinkov has made an initial public offering of Tinkoff Credit Systems (TCS) on the London stock market, hoping to raise $750m.

TCS said it plans to use the money from the flotation to build its growing retail bank business, TCS Bank.

TCS CEO Oliver Hughes said: "An IPO will help to further strengthen TCS Bank’s capital position and enable us to develop the payments and insurance businesses."

Unsecured consumer lending in Russia rose by an estimated 50% last year, despite the economic slowdown. Despite this increase, Russian consumer debt still stands at 12% of GDP, much lower than most developed countries.

Hughes said: "The economy has slowed a little but there is still very strong consumer demand.

"Retail is strong. This is just the right time to do an IPO – we have a solid track record behind us. We have massive growth to come."

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By GlobalData

TCS said its market share of credit card loans is 7.7%, while its net loan portfolio is nearly $2bn and it has issued more than 3.5m credit cards. Net profit for the six months to the end of June grew from $52m to $79m, an increase of 51.9% on the previous year.

TCS is the first Russian company to make an initial public offering on the London stock exchange since Moscow-based telco MegaFon floated for $1.8m in November last year.

The flotation is due to start 14 October, with Goldman Sachs, Morgan Stanley and Sherbank acting as coordinators and bookrunners, JP Morgan and Renaissance as bookrunners and Pareto Securities as a selling agent.

In August this year, TCS was sued by a customer to the tune of RUB24m ($730,000) for breaking the terms of a credit card contract he wrote himself.

Dmitry Argarkov, from Vornonezh, Russia, was offered a credit card contract by TCS in 2008. Deciding the terms did not suit him, he scanned the contract, altered the terms and sent it back to the bank.

The bank signed the contract without reading it and sent Argarkov a credit card, only later realising he had given himself 0% APR, no fees, no credit limit and the right to levy huge fees on the bank every time it broke the terms of the new contract.

When the bank terminated his credit card and sued Argarkov for unpaid balance and fees, a court waived all fees except for the unpaid balance.

Argarkov, who wrote a RUB6m ($182,400) termination fee into his credit card contract, tried to sue TCS for terminating it, and for daring to charge him interest and fees.

According to a statement on the bank’s website, both parties dropped their complaints before the case came to court.


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