At the June 17 roundtable on Russia’s Direct Investment Fund at The St. Petersburg International Economic Forum (SPIEF), UK Trade and Investment Minister Lord Green observed wryly that there was “a wide area of furious agreement” amongst the panellists. Indeed, the 16 business leaders and officials taking part in the St. Petersburg forum event gave enthusiastic appraisals of the government’s latest initiative to attract foreign investment to Russia.
Below are some key remarks from the St. Petersburg forum on the investment fund.
Kirill Dmitriev, general director, Russian Direct Investment Fund:
“Russia is highly attractive for investors, but unfortunately they don’t always choose in favour of Russia. This is partly a consequence of the risks investors face. We reviewed international experience and our conclusion was that one of the most attractive tools to attract investment by sharing risks was to create a national fund.”
“If we cannot make this transparent, if we cannot make this easily understood and very, very clean, it will not work. So that is the key point, it is absolutely fundamental.”
Lord Green, UK Trade and Investment minister:
“I think the investment fund is a good concept, it will encourage more direct investment into the economy...what it brings apart from capital is of course expertise – whether it’s financial expertise, or the technical expertise that comes from a strategic investor. One way or another it helps set the standard of international competitiveness beyond this particular project.”
“In the case of Britain we have some 600 firms invested in this country, so although there’s a good deal more we can do to develop the relationship there’s a good base to build on...For those that are here they know that it’s a good market, with lots of profitability to be had. For those who are not here, there’s an image issue to address. I think the investment fund can play a role in that.”
“I think it’s worth reminding ourselves that the direct investment fund is not an alternative to addressing the wider issues of government transparency, bureaucracy, etcetera, that President Medvedev referred to in his address [to SPIEF].”
Edward Eisler, co-head of the Global Securities Division, member of the Management Committee, Goldman Sachs:
“We have been an active investor in the Russian economy over the last few years and across the board we’ve had very good experiences working with the private sector and also with the government.”
“Cooperation with the government on the investment fund is a very appealing proposition. Being able to aline oneself with the government is certainly key and the optional co-investment nature has many benefits because it allows investors to tailor their investment to their own specific risk return objectives. But what is additionally key is the expectation of the large deal flow.”
James Turley, chairman and chief executive, Ernst and Young:
“What is fascinating is that having surveyed members of FIAC and others, the strategic investors who are here find Russia to be one of the most attractive emerging markets there is. They understand the hassle factor – there is one – but they know how to make it work.”
“Companies who haven’t invested here are scared. My sense is that the fund would be enormously effective at helping provide the local knowledge and helping companies figure out how to invest in strategic deals. I think it will be enormously positive.”
Klaus Kleinfield, chairman and CEO, Alcoa Inc.:
“I think the fund is a huge success. Jim [Turley] and I see the opportunities in Russia and we see the room for improvement. But when we talk to people who have not invested here we’re confronted with prejudiced views.”
“How do you reduce the strategic investment risk? That’s where the fund comes in. Strategic investors aren’t interested in the money, it’s about the local knowledge and helping to navigate the laws in the region.”
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