Russia’s investment image severely hit by Calvey affair, but Baring Vostok “will continue to invest”

The long-term horizon predictability for foreign investors in Russia took a big hit earlier this year with the arrest of US citizen Michael Calvey, the fund manager and founder of Baring Vostok Capital Partners (BVCP).

One of the most established Russian private equity firms, Baring Vostok invested in some of Russia’s best tech companies.

The Calvey affair was a heavy blow to Russia’s investment image, said Alexis Rodzianko, president of the American Chamber of Commerce in Russia. US companies that were already in Russia didn’t leave, he noted, but they have paused investment plans to see how the story pans out.

Fund managers interviewed by bne IntelliNews in Moscow tell a similar story, saying that fundraising has been suspended thanks to the uncertainties the arrest has raised. For its part, BVCP says it is not pulling out of Russia and will continue to invest, but it is working to get its staff out of jail.

“The case doesn’t just involve Calvey as six people were arrested. Calvey, Delpal and four more Russian colleagues,” says Elena Ivashentseva, a senor partner at BVCP. “It is unacceptable to use criminal law in a corporate dispute. We are grateful to Boris Titov for his support and that Michael was released to house arrest, but there are still four of our Russian colleagues in jail.”

Ivashentseva said that BVCP is not pulling out of Russia and continues to invest.

“The market is only 30 years old. It has only been a bit less than 30 years since the mechanisms of the market economy started to develop,” says Ivashentseva. “Investors don’t fully understand the potential of the market. You have been talking about the slow pace of economic growth but the kind of companies we invest into – the fintech, IT, telecom, banking and retail companies – are all growing at 30% a year or more. They can double revenue in a year. Yet the SMEs make up only 25% of GDP. In the west it’s more like 50-60%. We are staying in Russia. We have $3bn assets under management. We will continue to invest.”

Russia’s investment image severely hit by Calvey affair, but Baring Vostok “will continue to invest”Read More
Topics: Analysis, Finance, International, Venture / Private equity
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