MOSCOW - Investors bid up the shares of the credit card company of the entrepreneur Oleg Tinkov on its first day of trading on Tuesday on the London Stock Exchange, as the consumer credit business booms in Russia.
The initial public offering of the holding company, listed as TCS Group Holding, raised $1.1 billion, valuing the credit card company at about $3.2 billion. Shares in the company, Tinkoff Credit Systems, which uses a French transliteration of the founder’s name, closed up 4.57 percent in London on their first day of trading. The shares are trading as global depositary receipts, or G.D.R.’s.
Most of the proceeds will go to buy portions of the stakes held by Mr. Tinkov and his pre-I.P.O. investors â€" Goldman Sachs, Baring Vostok, Vostok Nafta, Horizon Capital and Altruco Trustees. Mr. Tinkov will retain just over 50 percent of the company after the initial public offering.
Russian consumers emerged from Communism entirely free of debt. This became the opportunity that Mr. Tinkov, who got his start opening microbreweries in the 1990s, latched onto to found Tinkoff Credit Systems in 2006. The company sends credit cards to Russians by courier, a business model akin to direct mailing.
Mr. Tinkov, the son of a Siberian coal miner, decided to open a microbrewery in St. Petersburg after spending time in Berkeley, Calif., and betting that Russians, too, would spend money on high-end beer if given an alternative to vodka.
He also created a line of frozen foods, named for his daughter, Darya. He sold the frozen foods line to the Russian oligarch Roman Abramovich in 2001 and the brewery business to InBev in 2005.
In this way, Mr. Tinkov became a serial entrepreneur. He embraced the possibilities that capitalism brought to Russia by forming new businesses from scratch, rather than fighting for stakes in the old mining and industrial assets of the Soviet Union that formed the path to wealth chosen by most of his fellow oligarchs.
Mr. Tinkov said he got the idea for the credit card business after receiving a piece of junk mail with visiting San Francisco - a direct mail advertisement from Capital One, the American credit card company.
When he formed Tinkoff Credit Systems, few banks in Russia offered easy access to credit cards though the wages of Russians were rising rapidly from trickle-down oil wealth. That made Russians good credit bets; With each passing year, most people could reasonably be expected to earn more and thus repay credit.
Salaries are still rising â€" they are up about 8 percent on an annualized basis so far this year â€" though economists question the sustainability of this trend so long as oil prices remain flat and labor productivity gains lag wage increases.
Also, as Russian consumers follow their American counterparts into deep credit-card debt, future growth will be slowed by the need to repay previous loans. The interest rates for purchases on Tinkoff credit cards in Russia range from 24.9 percent to 45.9 percent.
Still, Russian authorities have in recent years encouraged consumer credit both in the form of credit cards and retail financing, available in shops for everything from shoes to washing machines. Credit has eased the tapering off in standards of living as Russia’s decade long oil boom winds down, helping the government of President Vladimir V. Putin transition to slower growth.
