General Powell – America Needs Strong Russia

THIS POST WAS ORIGINALLY PUBLISHED JUNE 18, 2007

 General Powell – America Needs Strong Russia

“Russia: Investing in Prosperity”

Today is the first day of one of the major events in Russian investment banking market. 11th Annual Investor Conference. Renaissance Capital, the leading global emerging markets investment banking group headquartered in Russia hosts the meeting under the name of “Russia: Investing in Prosperity.” It is by far the largest annual gathering – with more than 1,000 leading investors, corporate executives and government officials attending it.

Renaissance Capital is well known in Russia for its meticulous high quality conferences. This time it is being held in the famous Gostinny Dvor – just a few steps from the Kremlin and Red Square. Everything at the conference is catered to investor’s taste – starting from Internet workstations to Bloomberg terminals. And today’s; speakers are one of the highest qualities:
- Former U.S. Secretary of State Colin Powell
- BP PLC’s Group Chief Executive Tony Hayward
- Deputy Prime Minister Sergei Naryshkin
- Minister of Finance Alexei Kudrin
- Minister of Telecommunications and IT Leonid Reiman
- Minister of Energy Victor Khristenko
- Head of the Audit Chamber Sergei Stepashin
- Head of the Federal Financial Markets Service Vladimir Milovidov.

Investors are treated to presentations from leading Russian executives representing, among others, Gazprom, Rosneft, Lukoil, Transneft, Surgutneftegas, Novatek, RAO UES, Norilsk Nickel, RUSAL, MMK, TMK, Polyus Gold, Severstal, SUEK, AFK Sistema, Prof-Media, MTS, Sitronics, Sberbank, VTB, Wimm Bill Dann and X5 Retail Group. Renaissance Capital is arranging more than 2,000 private, one-on-one meetings between investors and Russian corporates. Special roundtables on derivatives, real estate, the banking sector and endowments in Russia are also scheduled, as are regional site visits for investors to Sakhalin, Sochi and St. Petersburg.

Stephen Jennings and General Powell before the grand opening

The conference was opened with the speech by Stephen Jennings, CEO, Renaissance Group. “Russia is no longer a sideline observer at G8 summits. Nor is it kowtowing to the West. Russia isn’t just an economic hub of the CIS. It is a global economic and financial center in its own right. These are the realities of Russia today. International and domestic political rhetoric, and less than stellar market performance, are making headlines. But they can’t mask a fundamental truth. Russia today is a very different, and qualitatively stronger and more robust, global economic and political center of influence.”
Mr. Jennings stressed: “We are bullish on Russia, in spite of the weaker market conditions of late and the even more bearish political speak coming from London, Brussels and Washington, DC… Follow the money and you find a very different Russia compared to what emerges from pundits, naysayers and politicians… Not even rash statements by Western leaders, like Tony Blair’s swansong warning that foreign investors will turn away from Russia because of concerns over democratic principles, can dampen the enthusiasm coming from foreign and domestic investors alike.”

Naturally the keynote speaker was General Colin Powell. When the chairperson introduced Mr. Powell he asked – what is the way to present you “former Secretary of State” or “former general” – to which he got a great reply: “there may be former Secretary of State, but no former general”.

Mr. Powell in his eloquent 30 minute speech drew a great comparison lines starting from his young military years when Russia was potential enemy and iron curtain separated the world. He remembered his years when he was stationed in Germany and the Russian General Vladislav Achalov was the Commander in Chief of the 8th Army that faced US troops. Mr. Powell noted that he used to keep the small picture of General Achalov on his table – just to point to it during numerous visits of US Congressmen and Senators. When Colin Powell met general Achalov in person he found out that he also had Powell’s picture on the table for the same reasons.
General Powell very vividly described his meetings with President Gorbachev (comparing him with Chinese leader Deng Xiaoping). Describing the current world he noted that instead of red and blue there is a great mosaic developed. Russia faced serious challenges under President Eltsin, he gave credit to President Putin – who established rule of order, rule of behavior. “In each society the basis of Law should exist – that everybody has the ability to appeal to the Law”. 

“The world is flattening, information is moving around the world at the speed of light. The economy is getting more globalized”. And in these circumstances Russia is creating wealth for the people; it has the ability to trade globally, to move capital globally. 

Regarding recent rhetoric, General stated: “I’d rather have challenges between Russia and USA of current nature, than when I was Chairman of JCS every morning looking where Russian submarines are now.” “Business moves forward often without looking into domestic political considerations”.

“12-13 years ago I could never imagine the conference like this. Russia is really creating opportunities for people to come and do business here. There is time for openness. There is time for trading. Russian needs America, America needs Russia. We need Russia to be stable and confident.”

Deputy Prime Minister Sergei Naryshkin , General Colin Powell, 

Minister of Finance Alexei Kudrin

Discussing Telecom and IT with Minister of Telecommunications and IT Leonid Reiman

Russian NASDAQ – Rolling Out or For Whom the Bell Tolls

THIS POST WAS ORIGINALLY PUBLISHED JUNE 14, 2007

Russian NASDAQ – Rolling Out or For Whom the Bell Tolls

Before the Bell

Today Minister for Information Technologies and Communications Leonid Reiman inaugurated the Innovation and Growing Companies (IGC) Sector of the MICEX

With the toll of the bell the trading of units of FINAM Venture-IT Fund commenced – and it was smashing success.

The Bell Has Tolled

Within 90 minutes all units of the Fund were sold for 501,000,000 RUR (about $ 20 million). The book was oversubscribed 10%.

In reality – for whom the bell tolled? For those investors that missed opportunity. ”Opportunities are never lost; someone will take the one you miss” – this well-known quotation was confirmed today, as Russian investors acted on the market. As I mentioned several times in my posts – if you live in London, USA or elsewhere, it is next to impossible to apprehend all Russian realities, especially in business and financing. In the last two weeks I dealt with about 100 foreign investment companies and funds, but a tad few of them did invest. Sun Tzu said: “Opportunities multiply as they are seized”. I guess, it is too laborious to seize something out of your reach.

Leonid Reiman used the opportunity to elaborate on the development of Russian IT sector. He tried to avoid the issues on privatization of SviazInvest, however, provided a lot of interesting information on telecom and IT. He welcomed inauguration of the “Russian NASDAQ” and expressed the hope that some time it will be a real competitor to its US original. Some companies from the Former Soviet Union (FSU) are already mulling listing at MICEX’s IGC Sector. This new instrument shall enhance development of Russian high-tech by utilization of diverse potential of the stock market. This is a prerequisite for emerging of new strategic foreign investors in the Russian market. The Minister informed that in 2006 foreign investments in IT sector totaled 110 billion RUR (about $ 4.2 billion), and this year he expects more.

Alexander Potyomkin, MICEX President, stressed that the new opportunity for Small and Medium Enterprises (SMEs) emerges today and it is really a breakthrough – SMEs were thinking about classic portfolio investments, and now a new way is open. Moreover, the MICEX itself acquires a new instrument that may increase its profits.
Victor Remsha, the founding shareholder and General Director of FINAM noted that it is really a happy coincidence – establishment of MICEX IGC Sector with somewhat lax listing rules, and maturing of the FINAM Venture-IT Fund that has quality Russian IT companies.
Alexey Rybnikov, MICEX General Director, stressed that successful placement of the first issuer in IGC Sector opens a new road for Russian IT and telecom SMEs – and by the end of this year about 10 companies are expected to be listed. The other sectors are welcome – biotechnology, high-tech companies of machine building, semiconductors, etc.

Natalya Ivanova, Managing Director of the Renaissance pre-IPO Fund, was at attention – the Fund that she manages successfully invested in innovative and growing companies. “It is indeed a historic happening. Now Russian companies have a practical opportunity to look for investments domestically, not on AIM or NASDAQ” – she told me.