Russian business and financial updates
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Vladimir Yevtushenkov is enjoying the new contract of his life. A few years ago, after a battle with state-owned oil giant Rosneft that threatened to bankrupt his Sistema conglomerate, the 72-year-old Russian tycoon is now leading the way in a boom in previously dormant stock markets. long-standing movement of the country.
Sistema, whose main assets are Russia’s largest telecommunications group MTS, is seeking to list companies from agricultural producer Steppe and health clinic Medsi to pharmaceutical group Binnopharm Group, one of the world’s leading drug manufacturers. main producer of Russia’s Sputnik V Covid-19 vaccine and MTS’s bank.
The group’s recent success with other initial public offerings seems to justify Yevtushenkov’s decision to reaffirm its commitment to investing in technology after the state took a controlling stake in the house. Bashneft oil production in 2014.
Ozon, an e-commerce site co-owned by Sistema, has more than doubled in value since listing last year, while paper maker Segezha’s revenue in the most recent quarter grew 45% year-on-year. same period last year after the company’s own IPO.
Meanwhile, MTS, the crown jewel of the Sistema, is entering a race to create a technology-based “ecosystem” that offers customers everything from financial services to online entertainment.
“We used to live. . . our ideals of self-reliance and self-sufficiency. And we are not an investment company,” Yevtushenkov told the Financial Times. “People understand now that we don’t lose our own money and we won’t lose anyone else’s either.”
While many of Sistema’s technology investments are years away from turning a profit, Yevtushenko said they’ve been well-balanced with traditional assets in his portfolio. “We are not worried. If we had a problem with Ozon, another business would pull us through. Our strength is that we diversify. “
Today, Sistema is co-investing with state-owned banks and soliciting additional funding for its venture arm as it considers future IPOs – thanks in part to the recent surge in Russian retail investors.
“The market is very volatile, bank deposit rates are close to zero, inflation is quite severe,” Yevtushenkov said. “So people are looking for safety in buying and selling stocks, because if you guess right, it gives them a much higher income than keeping their money in the bank. It’s like a drug. You’re hooked and you can’t stop.”
Yevtushenkov, a former Soviet factory engineer, got his start at the dawn of Russia’s capitalist era trading oil and computers with colleagues from the Moscow mayor’s office. For many years, he was close to the then powerful mayor of Moscow, Yuri Luzhkov, although the two failed in 2004.
Unlike many other oligarchs, Yevtushenkov has won praise from investors for his commitment to the mass market and corporate governance, which is rare in a country where boards are often is held in a ceremony and shareholders pay a high dividend by themselves.
Systema is Russia’s largest publicly traded diversified holding company. Last year, children’s goods retailer Detsky Mir became the first Russian company to own 100% of the shares through a free transfer, although an investor has since created 30% of the shares. .
Other financiers see Yevtushenkov as a supporter of Russia’s business community, which has struggled with years of sluggish economic growth and dwindling consumer purchasing power.
Calls for reform have largely fallen on deaf ears as the Kremlin strengthens state control over the economy and seeks to reduce companies’ reliance on Western funding following sanctions. sanctions imposed by the US and EU over the annexation of Crimea in 2014.
Yevtushenkov was placed under house arrest for several months that year on charges of illegal privatization of Bashneft, which was later dropped. After a lengthy legal battle and the intervention of President Vladimir Putin, in 2017, Sistema agreed to pay Rosneft, which had acquired Bashneft from the state a year earlier, $1.7 billion in damages. often damages due to alleged expropriation of property.
Mainly due to the Bashneft deal, the group owes about 210 billion Rbs ($2.9 billion), a burden that Yevtushenkov says has prevented Sistema from reinvesting in its business.
The issue of corporate reinvestment has become particularly acute in Russia this year after Putin criticized companies for pocketing record dividends as ordinary people suffer during the pandemic. Then, when prices of staples like cereals skyrocketed – of which Steppe is one of Russia’s biggest producers – Prime Minister Mikhail Mishustin blamed the rise on “greed.” of entrepreneurs.
The criticism sent chills through Russia’s business community. More than three-quarters of business owners fear unfounded criminal prosecution, according to a survey conducted by the presidential security agency in May.
Yevtushenkov said of Putin’s remarks: “We always do what the president said. “We don’t actually pay any dividends because the business always needs money.”
US investor Michael Calvey, whose private equity fund Baring Vostok co-owns Ozon with Sistema, was sentenced to six years of probation last month for embezzlement. The case against Calvey is seen by many as a sign that Russia’s investment climate has turned away from the priorities of the security service.
Yevtushenkov thinks those legal troubles are part of doing business in Russia. “I’ll be honest with you – I could have stopped investing. But I survived. I think Calvey is a tough guy. He will survive and he will continue to invest,” he said.
Yevtushenkov, who sees business as a “minefield,” was at peace with playing by the state’s rules.
“The state has the right to make any decision that businesses may like or dislike. . . There can be some unpleasant consequences for someone – already for us. But that’s life,” he said. “Businesses should operate in the interests of the state. As soon as it loses that vision, something nasty will always happen. “
