Such a sizable money inflow is a rare occasion in present-day Russia, so the event came as a sensation to the ruling top, the media and the expert community alike.
The Baring Vostok Capital Partners is a managerial company to deal with direct investment funds in the post-Soviet area to a capital exceeding $800 million. As we see from its name, the new fund will come as a third under the Baring Vostok. Its two longer-established counterparts focussed their interests on the oil-and-gas industrial complex, consumer goods manufacture, telecommunications, the mass media, financial services, and hi-tech projects. The company has invested in many dynamic Russian-based companies, suffice it to mention VimpelCom, Golden Telecom, STS Media, SladCo or Borzhomi.
The Fund III endeavor has attracted major institutional investors based in Europe, North America, the Middle East and Asia. Many of them have never before made direct capital investment in Russia, said Baring Vostok managers.
Russia and the other CIS countries remain, in many aspects, venturesome investment markets but investment here is much more profitable than in a majority of other developing markets, pointed out Michael Calvey, Baring Vostok co-manager partner.
The new fund will channel 80 to 90% of its capital into the Russian economy, said Alexei Kalinin, another co-manager partner. Fund III will focus attention on economic sectors that have proved successful, alongside venture projects and investment in Ukrainian- and Kazakh-based companies. The latter point is quite logical. Kazakhstan leads the Commonwealth of Independent States for per capita overseas capital investment, and is offering a far more beneficial investment climate than Russia is. As for Ukraine, it has long been attractive to Russian investors, who look forward to even more lucrative terms now that a new regime has come in.
Baring Vostok projects have medium-scale business in the foreground. That is the principal aspect that makes the company so attractive to Russia. Medium-scale business is making rapid progress with high profits, and is not so badly exposed to political hazards as other business, pointed out Mr. Calvey.
The Baring Vostok orients on such business that promises to make a firm basis for Russian economic progress, due to its system-forming nature. It can find ever new niches, and is capable of innovation, said Arkady Dvorkovich, chief of President Vladimir Putin's expert board.
The Baring Vostok intends to concentrate on many companies' control stock purchasing. It does not merely invest in a particular company, it is active in its development, stressed Mr. Kalinin. "We have been active in Russia for ten years now. We have stocked up sufficient practical experience over the time to fully implement our financial investment opportunities-and we are offering lucrative terms for minor holders. Our partnership has always satisfied them," he said.
Russia has vast resources for today, the Stabilization Fund, gold and currency reserves, and considerable banking assets. Be all that as it may, the manufacturing economic sector badly lacks money. Such funds as the Baring Vostok have every chance to develop into vehicles of Russian progress, remarked Boris Titov, Business Russia NGO president. "It is up to every fund to choose its investment fields on its own, but we shall work to attract [the Baring Vostok's] attention to the manufacturing economic sector," he added.
If other overseas companies join the Baring Vostok to make sizable progress in the Russian market, that will demonstrate Russia as a country to do business with and invest in so as to build up corporate capitalization, said Mr. Dvorkovich while commenting the start of Fund III activities. "We see the Baring Vostok as a partner in promoting the reforms Russia vitally needs."
The emergent direct investment fund is lucrative to the Russian economy. In particular, it and similar companies are bringing civilized investment patterns to this country, with the entire national economy to gain.
