AK&M Rating Agency assigned the ‘A’ reliability rating to BALTINVEST Management Company LLC as per the national scale, with a stable outlook. The ‘A’ rating qualifies BALTINVEST Management Company LLC as a highly reliable investment company. Risk of a delay in meeting liabilities is relatively low, restructuring risk for the loan / part of the loan is minimal.
One of the arguments for the rating score is that the key financial indicators of the company are improving. At the end of the first half year 2010, assets of BALTINVEST Management Company LLC as per RAS was RUB 141.9 million increasing by 2% since the start of the year. In 2009, the company’s assets increased by 12%. Net asset value of BALTINVEST Management Company LLC increased by 11.7% in 2009 and by 1% to RUB 140.6 million in the first half year 2010. Revenue and fees of the management company increased by 31% in 2009. In the first half year 2010, the earnings continued to grow.
The growth of the customer base and the funds managed by BALTINVEST Management Company LLC prove the company’s reliability. Net value of assets under control of the Company as of July 1, 2010 was RUB 1.33 billion increasing by 12% since the start of the year, the number of customer accounts grew by 26%. In 2009, net value of the assets managed by the company rose 2.7-fold, the number of customer accounts by 60%.
In the short term, the Company intends to establish three closed-end investment funds and to obtain a license for professional security management activities.
The company is backed up well by the principal owner. The principal shareholder of BALTINVEST Management Company LLC is OJSC Baltinvestbank which is in the TOP 100 largest Russian banks. Therefore, one of the company’s proprietors is a credit institution with considerable financial capacities capable to provide essential support under force majeure circumstances or should the macroeconomic situation get worse. The property structure also ensures considerable synergies and an appreciable competitive edge in attracting customers. The company’s credit potential taking into account its size and proprietors may be regarded as attractive.
BALTINVEST Management Company LLC has achieved a high share of quick assets (liquid assets) and a sufficient availability of own funds. Short-term financial investments prevail in the asset profile (62.6% as of June 30, 2010). Besides, the share of cash funds is relatively high (3.1%). At the same time, the share of non-current assets in the asset profile is insignificant (0.1%). The principal source of the company’s owned assets is its equity capital, the share of obligations being insignificant which speaks well for the company’s paying capacity. At the end of June 2010, the share of the company’s own funds in owned assets was 99.1%.
The Company’s business is in many respects vulnerable to macroeconomic risks. First of all, the company’s incomes depend on the net value of assets of unit investment funds managed by it. The lack of economic stability, the shrinking real estate market, the collapsing stock markets and the losses their players incurred due to the global financial crisis resulted in an outflow of some clients from the pooled investment market – this trend was particularly obvious in 2008. This, along with the little certainty in the way of how the markets may further develop, still constitutes an essential risk factor. At the same time, it will be noted that the company specializes in managing unit investment funds so that its earnings are not well diversified.
Our retrospective analysis revealed that the company went through long periods of poor performance, which is another risk factor. In 2006-2008, the company posted losses. The greatest loss was posted for the crisis year 2008. This negative signal is partially damped by the high profit the company showed in 2009 already. In 2009, its balance sheet profit was RUB 16.1 million against a loss of RUB 17.0 million for 2008, return on assets (ROA) was +11.0%. In the first half year 2010, the company’s profit and profitability somewhat decreased, yet remained positive.
BALTINVEST Management Company LLC was established in 2004. The FFMS of Russia assigned it license 21-000-1-00664 as of October 27, 2009 for managing investment funds, unit investment funds and non-state pension funds. The company specializes in managing unit investment funds of various types. It currently manages 8 open-ended and 3 closed-end investment funds. As of July 1, 2010, the company’s assets amounted to RUB 141.9 million, own funds total RUB 140.6 million. Net value of assets under control of BALTINVEST Management Company LLC as of early July 2010 totaled RUB 1.33 billion.

This press release is based on the statement of assigning a rating score to BALTINVEST Management Company LLC.
The rating score, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's reliability and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities.
AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.
AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.
AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Provision 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide business banking services to project and engineering entities implementing investment projects), the MICEX (as a prerequisite for including bonds in the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation base, for listing bonds and for providing access to the MICEX+ trading mode). Pursuant to an order of Russia's Government AK&M Ratings count for approving the capitalization increase procedure for banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.

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Press release by: Sergey Yarkoev
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Email: Yarkoev@akm.ru