Private Equity Russia

The Belarus government is preparing a project at the order of the president which will lead to the creation of a state venture company.  As proposed, the fund will initially be controlled by the State innovation fund.

“We studied several mechanisms for supporting venture financing at a state level”, said Anatoly Grishanovich.  ”It was decided, as an experiment, to transfer responsibility for this to the State Innovation Fund, as it has experience working with these kinds of projects.”

The fund would be similar in function to the Russian Venture Fund and the Belarussian government will be coordinating with its counterparts in Russia and Kazakhstan in setting up and operating the new fund.

The first Belarussian Venture Fair will be held in Minsk in November at which the activities of the new fund will be spelled out in detail and introduced to the public.

[Via Unova]

The Ministry of Economic Development has proposed a wide-ranging stimulus package to promote innovation in Russia, including eliminating capital gains for long-term venture capital investments and creating a special tax regime for innovative companies.

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The State Agency of Ukraine For Investments and Innovations head Lyudmila Suprun recently met with Altana Capital (formerly Upras Capital) founder Anatoliy Amelin regarding development of state policy in terms of innovative investments and improvement of the investment environment.  According to the agency, Altana Capital was invited to participate in the process of creating a national venture fund for investment into innovative projects.

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The supposed pipeline of Russian IPO’s this year may reach $20 billion.  Following Oleg Deripaska’s IPO of RUSAL in Hong Kong, the big question is, what will be the IPO destination of choice – London or HK?  (New York, it seems, is not even in the running).  Foreign traded shares still sell at a significant premium to domestic shares, based on convenience and worries about transparency, regulations and liquidity on the domestic market.

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A document from the Ministry of Economic Development of the Russian Federation leaked on Slon.ru outlines the government’s plans to reform the array of State-Corporations, or Goskorporatsii, including RosNano, Vneshekonombank and Russian Technologies (Rostechnologii).

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Belarussian President Alexander Lukashenko met with a team from the Rothschild Group last week and has invited the group to provide valuation services for enterprises slated for privatization in the republic and to advise the government on their privatization program.

The team also met with senior members of the government and the leadership of the national bank.

“If agreed in principle, we could identify five to seven projects in the near future and develop them more seriously,” said Lukashenko.

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Russian Minister of Eduction and Science Andrei Fursenko told President Dmitry Medvedev yesterday that Russia had already established 166 business incubators throughout the country for the support of pre-venture capital and private equity start-up businesses, largely within the context of the university system.

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Interfax is reporting that the Russian Venture Company and the government of Krasnoyarsk Krai have signed an agreement on cooperation and conduct of joint events for the promotion of innovative businesses and the development of a domestic venture capital industry.  The agreement was signed during the 7th annual Krasnoyarsk Krai economic forum.

This event also saw an agreement signed with  the state corporation RusNano regarding the further development of the Siberian Federal University in Krasnoyarsk, currently being undertaken by various state-backed funds working towards the development of innovative businesses in Russia.

The EBRD recently announced its new strategy for Kazakhstan, which will define the priorities for the organization’s investments and lending activities in the country for the next three years.

The bank will seek to assist Kazakhstan to diversify its economy away from natural resources by supporting projects promoting innovation, best business and environmental practices and energy efficiency.

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OPIC, The United States’ Overseas Private Investment Corporation, recently announced that it has completely restored its political risk insurance programs for Ukraine, which had been suspended for ten years due to a non-payment disagreement.

The disagreement, which lasted for a decade, was  over non-payment of a paltry $17 million sovereign-guaranteed debt incurred by the Ministry of Defence in 1999.  OPIC paid a political risk claim on the debt to an insured US supplier, but was never repaid by the Ukrainian side as was called for in the agreement.

Analysts estimate the opportunity cost to Ukraine over this issue in terms of lost US investment into the country could be in the range of $5 billion to $10 billion.

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Russian Finance Minister Aleksei Kudrin announced yesterday that the government is instituting new procurement policy to buy technology products that are innovative and made in Russia.

Russia’s state procurement budget is around $133 billion.  About $20 billion of this now goes to Russian technology companies.