By Kerry Sunter Head of CI Fund Operations Kleinwort
There have been many references to investing in Russia in the
financial press recently. So what's the deal with this?
Isn't Russia that corrupt country where only the most
hardened of investors dare venture to risk their capital at their
own peril? That doesn't seem to fit with the increased recent
interest in funds being launched in Jersey, which have specifically
focused on investing into Russia, using a variety of sectors for
investment into the country, including Private Equity,
Infrastructure, Clean Tech and Real Estate.
Apparently, the current and general view amongst high profile
investors and Investment Managers globally is that although Russia
is very cheap to invest in, it is certainly not for the cautious
investor, given the country's history over the last 15 to 20
years, which includes a bail out from the IMF and rumours (and some
confirmed reports) of corruption being rife.
The Russian government has confirmed in recent years that they
recognise corruption as one of the most serious problems facing the
country, and have taken steps to counter it. There have also been
reports confirming the view that most Russians believe there is no
place for corruption in Russia's future, if it is to succeed in
becoming one of the global financial players.
But what does this mean for investors, is Russia safe to invest
in? The World Bank reported earlier this year that inflation in
Russia had reached its lowest point for two decades and that the
country's public debt is currently approximately around 10% of
GDP, compared to the US, where it has reached 100%. Russia's
MICEX index has risen 5.42% since the start of the year and Russian
stocks are seen as having more attractive price to earnings ratios
than other countries that form part of the BRICs (Brazil, Russia,
So clearly the growth opportunities are there, but all of that
comes with risk, and it seems that some investors are willing to
accept that risk. We have seen a number of Russian investing funds
being launched in Jersey recently, including the Tatarstan Clean
Tech Fund LP, which was the first ever international Clean Tech
fund with a specific mandate to focus on the Russian Federation.
The Fund has been seeded with €110 million, with a target fund
size of €200 million.
Clean Tech and Renewable Energy aren't the only areas in
Russia that Managers are focusing on. We have also seen enquiries
for funds investing into infrastructure and following some
promotion locally by Jersey Finance and other organisations, we
expect to see the enquiries for funds in this area increase in the
Managers are beginning to explore launching new structures
investing into Russia so this must bode well for Jersey. The
jurisdiction has a finance sector which is already experienced in
the Russian market and this, combined with a first class regulatory
structure for funds, means that it is surely onto a winning
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Under Regulation (EU) No. 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories ("EMIR")...
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).