The Kremlin is reportedly looking to fill 30 private equity jobs for a new fund being set up by VEB, or Vnesheconombank, the state development bank of Russia, reports Bloomberg.
Russian president Dmitry Medvedev announced the creation of the fund in January, as part of his efforts to move the Russian economy away from its dependence on natural resources. The fund is scheduled to receive at least $10 billion of government money over the next five years, and could attract another $40 billion in co-investment funds from foreign buyout firms and sovereign wealth funds.
It will be managed by Kirill Dmitriev, a former Goldman Sachs Group banker and current president of Moscow-based Icon Private Equity. It will focus on investments in infrastructure, telecommunications, pharmaceuticals and aerospace.
Russian Prime Minister Vladimir Putin is helping to attract investors to the fund. He recently introduced manager Dmitriev to representatives from Goldman Sachs, Blackstone Group LP (BX), Abu Dhabi Investment Authority and other funds from the U.S., Europe, Asia and the Middle East. The officially approved co-investors are scheduled to be announced at a St. Petersburg economic forum in June.
Russia is finding it a bit challenging to attract foreign private equity capital, perhaps based on its past reputation for questionable business practices. Although PE managers in Russia have raised $1.4 billion in the past three years, that still lags the amount of PE capital among BRIC countries. Data from the Emerging Markets Private Equity Association lists PE capital raised for China in the same period at $28.6 billion, followed by $15 billion for India and $5 billion for Brazil.
“Russia has not proven to be a place where Western private-equity investors can have the returns and realize the profits commensurate with the risks they’ve had to take,” Carlyle co-founder David Rubenstein is quoted as saying.
The new fund is seeking to change that perception. “There are major opportunities to modernize infrastructure and some very big checks will be written,” said Dmitreiv. He is a graduate of Stanford and Harvard universities, and worked for McKinsey and Goldman before returning to Russia to work in private equity.
Would you consider taking a private equity job in Russia? Or investing there? Add your comments below.
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