Private Equity Interest in Russia On the Rise, Finds Roundtable Hosted by Ernst & Young, RDIF and Squire Sanders
Moscow, 14 June 2012 – A roundtable held today by Ernst & Young, the Russian Direct Investment Fund (RDIF) and the global legal practice Squire Sanders discussed the findings of the “Private Equity Capital Confidence Barometer,” an Ernst & Young research report, and noted a significant increase in interest from private equity funds in Russia, despite the unfavorable conditions of the global economy.
The report indicated that since the creation of the RDIF, the share of long-term investors planning to increase acquisition activity in Russia has increased from 25% (October 2011) to 48% (April 2012).
Alexander Ivlev, Managing Partner for Russia at Ernst & Young, commented, “The Ernst & Young report confirms that Russia is displaying positive trends in its economic development. Russia often surpasses its competitors in the contest for international capital.”
Kirill Dmitriev, CEO of RDIF, said, “We are glad to see the results of RDIF’s efforts to attract private equity funds to Russia and of our collaborations with other global investors confirmed in research conducted on the international level.”
Christopher Rose, Partner at Squire Sanders and an executive board member of the Russian Private Equity Initiative, an association of private equity funds working in Russia, noted, “Private equity funds see great potential in Russia, although a number of challenges remain. This roundtable provided an opportunity to discuss the challenges and provide recommendations. Among our recommendations is opening the way for Russian pension funds to invest in the Russian economy via private equity funds.”
The roundtable discussed the attractiveness of Russia as a destination for private equity investments and Russia’s advantages over other emerging markets. The participants also noted a number of limitations encountered by investors in Russia and discussed the collaborative efforts of business and the government to eliminate them. Such efforts include improving the legal system, removing administrative barriers, combating corruption and fostering competition and entrepreneurship.
The participants of the roundtable also put forth a series of concrete recommendations. They proposed examining the possibility of changing the regulatory mechanisms of the national pension system in order to allow Russian pension funds to make investments in Russia via private equity funds. They recommended full implementation of International Financial Reporting Standards by Russian companies in order to make their accounts more accessible to international investors. The roundtable also discussed the need for clearer communications from Russia’s regions and information on government practices on the local level. The importance of making the high-technology market a key sector of the economy through legal stimulus measures was also noted.
In addition to the RDIF, investors that participated in the roundtable included Elbrus Capital, Gazprombank, Mint Capital, UFG Private Equity and Unicredit Securities.
About the report:
Ernst & Young’s “Global Capital Confidence Barometer” was conducted among 150 directors of leading private equity funds.
Notes for Editors:
Russian Direct Investment Fund (RDIF), established in June 2011, is to be capitalized with $10 billion in Russian government funds to make equity investments that generate strong returns. In each investment it makes, RDIF is mandated to secure co-investment that as a minimum matches its commitment, thus acting as a catalyst for direct investment into the Russian economy. Additional information is available at www.rdif.ru.
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. Currently, 4,000 professionals work at 18 offices throughout the CIS in Moscow, St. Petersburg, Novosibirsk, Ekaterinburg, Kazan, Krasnodar, Togliatti, Yuzhno-Sakhalinsk, Almaty, Astana, Atyrau, Baku, Kyiv, Donetsk, Tashkent, Tbilisi, Yerevan, and Minsk. For more information, please visit www.ey.com.
Squire Sanders is one of the world’s leading commercial legal practices, with over 1,300 lawyers in 37 offices located in 18 countries. Its private equity practice covering Russia and CIS is top-ranked by independent legal directory Chambers Europe 2012, which describes the team as ‘one of the market leaders in private equity’.