| JRL Home | JRL Simple/Mobile | RSS | Newswire | Archives | JRL Newsletter | Support | About
Old Saint Basil's Cathedral in MoscowJohnson's Russia List title and scenes of Saint Petersburg
Excerpts from the JRL E-Mail Community :: Founded and Edited by David Johnson

Calling Wall Street

Wall Street Stock Exchange Facade and Wall Street street signRussia's government has teamed up with top Wall Street bankers to create a $10 billion fund aimed at attracting more private equity cash to the country. The fund will be co-invested and co-managed by a group of international private equity majors, with a steering committee chaired by Prime Minister Vladimir Putin to advise the fund. The committee will include CEOs from top US banks, including Goldman Sachs' Lloyd Blankfein, JP Morgan Chase's Jamie Dimon and Bank of America's Brian Moynihan, the Wall Street Journal reported.

The project is part of President Dmitry Medvedev's plan for the government to attract foreign capital by sharing the risks with investors, announced at the Davos business forum on January this year.

The government wants to create an international financial centre in Moscow, and the planned privatisation of state assets could help attract potential investors.

"Shares worth tens of billions of dollars in leading banking, infrastructure and energy sector companies will be privatised over the next three years," Medvedev announced in Davos.

Vladimir Osakovsky, chief economist at Unicredit in Russia, said the fund will help to create the financial base for the modernisation drive, and could provide access to substantial funds for investment banks to manage.

"There is no problem with the availability of resources in Russia, but the institutional environment and the lack of projects to invest in is a more crucial issue," Osakovsky said.

Mark Rubenstein, chief strategist at Metropol, said that for foreign private equity giants this fund wasn't that important, when some $200 billion will be invested in privatised state assets.

"I think that the state will have no problem with investors for these assets, and the successful sale of 10 per cent of VTB proves this," he said.

The main intention of foreign investment firms to get on board this project is to build good relations with the authorities to participate in more lucrative projects in future, Rubinstein added.

While the state's involvement acts as a major guarantee for investors, the advisory board is not expected to meet together and still has no official mandates.

Leading private equity firm Carlyle Group passed up the opportunity to participate in the fund, based on their previous experiences here, the Journal reported. According to Secret Firmy magazine, the group lost out on a $12 million investment in Apteka Holdings, a chain of pharmacies. Meanwhile Kohlberg Kravis Roberts suffered losses on investments in Lomonosov porcelain factory and Kamaz truck manufacturer, according to Secret Firmy.


Keyword Tags:

Russia, Economy, Business, Investment, Trade - Russia News - Russia - Johnson's Russia List

Bookmark and Share - Back to the Top -        


Bookmark and Share

- Back to the Top -        

  Follow Johnson's Russia List on Twitter Tweet