PE&VC in Russia and CIS: specialization and opportunities for entry deals

02.11.2011

• VC: Aggressive financing of a large number of venture capital projects, the most successful of which will set new trends and bring the highest returns
• PE: Only existing business can grow along with the growing money supply (amidst excess global cash supply, Russia will also turn to aggressive monetary policies)

The third annual professional conference Russian Private Equity Congress took place on October 27, in Moscow. The event was organized by Cbonds Information Agency, specialized portal PREQVECA.ru and Russian Private Equity journal.
The conference was attended by over 150 representatives of PE houses, venture capital funds, banks, investment companies, real sector, law firms, accounting and consulting firms.

On the back of the global financial crisis, new opportunities open up in Russia and the CIS for deals with large expected returns. Global investors in PE&VC funds (LPs) are still waiting for better conditions in financial markets. Meanwhile, government agencies and local businesses are becoming increasingly active in this sector. One of the common trends of the recent years in Russia is growing popularity of endowment model in asset management, which strengthens positions of local investors in the domestic PE&VC industry.

Newly launched funds are predominately specialist funds. Today, few people consider simply buying the assets from the wide range of industries and sectors on expectations of swift growth with the market. Several specialist funds were presented at the conference, including one of the first private seed funds, the first mezzanine fund, the first infrastructure investment fund, a fund investing in processing companies and others.

In Russia, three sectors dominate: digital economy, power, infrastructure and consumer sector (including all types of services such as health care and financial services).

It stands to mention that digital economy is a global investment trend, and Russia wants to be part of it. With the assistance of government development institutions - RVC and RUSNANO - this sector is expected to attract record-breaking investments in the local market history. Announced largest private technology fund with a target size of USD 250 mln managed by one of the leading players in the Russian PE market - Russia Partners - can also be attributed to this trend.

Thus, it is safe to say that the "new money" in the industry will be mostly specialized.

As to the management of portfolio companies, here funds are focused on quality improvement and value enhancement, as the current market environment is not favorable for exits. Now, it is a better time for buying (of course, for those with available cash).

Conference materials and presentations are available at http://www.cbonds-congress.com/events/77/materials/