July 19, 2010
They are on the front page of newspapers from time to time and do not stop
to impress the world with their huge fortunes. Only to count the first 100 richest
Russians and their total estimated value is close to $140 billions with no less than
62 billionaires and 50 of them living in Moscow. Impressive figures. Not to mention the oil or gas colossus like Lukoil or Gazprom with huge potential for foreign investments.
The question is where are all those money are going? Of course, a part of them is invested in local businesses but a part of them is going abroad. The first steps of Russian economic expansion abroad aimed the former CSI countries. Huge investments were made in Belarus, Armenia or Uzbekistan especially to gain control on natural resources. As large gas, oil or metal companies expanded, most of Russian investors moved their attention to emerging markets in Middle East and Eastern Europe but they are also trying to diversify their portfolio and enter in western markets like Germany, Austria, Netherlands or even in the USA.
As any other investors, the Russian investment companies are looking for higher margins of profit. Still, the large companies are going abroad and investing also for gaining access to raw materials or to have access to know-how and advanced technologies. This secures them both good profits and interesting markets on the long run, but also helps them to be competitive in an economy dominated by globalization.
Russian investors are also aiming for a more relaxed economical environment and new opportunities. They are attracted by the real estate market, looking for luxury properties in London, Spain or French Riviera but they also invest in trade companies all over Europe or greenfield projects like telecom in Africa. Funds are going abroad as private investors, company expansions but also as venture capital funds or investors groups. You can find
here a list of potential partners from Russia.
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Russian investors are, indeed, attracted by investment opportunities in other countries. One could ask-why not invest in Russia? Probably to the risks and problems they may face, such as the meddling bureaucracy and the tax system. Russia has good business legislation, but, unfortunately, it isn’t quite visible in the courts. And innovative Russian companies sell their products mostly abroad. However, Russia took a great step in technology when Silicon Valley venture capitalists visited Russia in May.
Comment by will_bv — August 2, 2010 @ 9:01 am
Yes, they have indeed been attracted by real estate investments, actually about two years ago they were in the news with their South-East Asia property investments going up. It was an idea favored by the low prices and good weather. Also, a large number of Russian tycoons started to invest in the Italian real estate market at the beginning of this year, as more and more British investors began to leave. And it’s not only property investments that Russians are interested in, an investment group from Russia also provided business capital to Facebook, so…only good news from Moscow.
Very good blog VCgate and great product, good luck!
Comment by james — August 5, 2010 @ 4:08 am
I agree with will, Russia has problems with bureaucracy. But they’re very good in tech, too. Lots of hackers as well. The president has great plans with Skolkovo and maybe it’s going to be a second Silicon Valley, but THE Silicon Valley remains unique. They’re one step ahead of anything.
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