BARING VOSTOK HEAD PREFERS RUSSIA

MOSCOW, February 24 (RIA Novosti) - Mr. Michael Calvey moved to Moscow from London ten years ago to lead a Russian-oriented direct capital investment fund. His managerial competence has helped the Baring Vostok Capital Partners investment company, within the Baring Private Equity International transnational group, increase its assets several-fold since that day. The BVCP has invested $336 million over these ten years, through its two funds, in forty projects based in Russia and other CIS countries-suffice it to mention the major VimpelCom, STS Media, SladCo, Syktyvkar timber-processing combine, and Borzhomi.

Mr. Calvey is launching, within a few days, its third private investment fund, the Baring Vostok Private Equity Fund III. A $400 million capital makes it the richest since the Russian default of 1998.

Michael Calvey informed the Moscow-based newspaper Vedomosti about details if the latest Baring Vostok venture.

The$ 400 million collected will be invested in companies with an annual turnover of no less than $10 million, and based in Russia and other countries of the Commonwealth of Independent States. The fund will bring together approximately 25 investors. Major pension funds and corporate insurers and investors based in America, Europe and Asia will make a majority. Russia accounts to 85-90% of the portfolio.

To be active for ten years, the Fund III will have an investment period of four to five years, enough to spot and purchase promising companies and prepare them for sale.

95% of global private capital is concentrated in Europe and North America, areas where 10-15% annual profits are too good to be true. That is why many capital investors take the risk of moving to Russia, however much the Yukos affair might have put them on their guard. Russian authorities are focussing attention on corporate giants, while the Baring Vostok concentrates on medium-scale business, which faces investors with much smaller political hazards, reassures Mr. Calvey.

However, it is much more probable to lose than gain in Russia, the way it is today. If you come here for a short time, you will hardly be any success, he warns.

It is essential to build infrastructures in such a way as to reduce hazards to the least possible, stressed the Baring Vostok head.

His company has never trespassed the law. That is, perhaps, why it has extremely few enemies now, he deems.

Russian capital investors are the Baring Vostok's principal rivals for today. Overseas investment accounts for a mere 5% of the total Russian private joint-stock capital.

Though Mr. Calvey has private investment in China and India, he sees Russia as the most lucrative field. The Baring Vostok funds are holding real full-fledged business here, which is much better than Asian- and American-based funds. To tell the truth, Mr. Calvey is now all at sea about them, he confessed.