September 29th, 2014

Foreign investors are leaving Russia

1395179596_jekonomist-investory-stremitelno-pokidajut-rossijskij-rynokRecently, foreign investors started fleeing Russia, one after another. Private investment funds began leaving the market along with major investment institutions and businesses. Recently, foreign investors started fleeing Russia, one after another. Private investment funds began leaving the market along with major investment institutions and businesses.

The International Finance Corporation (IFC), the investment branch of the World Bank Group, was one of the first institutions which refused to invest in the Russian market. Although the IFC has not formally suspended its operations with Russia, it did not make any positive decisions on investments in Russian projects in April, and since June has ceased to bring any project to the board of directors.

The European Bank for Reconstruction and Development (EBRD) was established in 1991 to invest in the former Soviet bloc. Its shareholders are 64 countries, the European Union and the European Investment Bank. Russia has the most assets derived from the Bank, totaling $2.5 billion in 2013. The EBRD has mainly financed agriculture, developers and retailers. But in late July the EBRD announced its exit from the Russian market as the shareholders of the Bank decided not to make investments in Russia in the near future.

OPIC is a government agency that helps American businesses secure their positions in foreign markets; it is the largest American investment fund. In September it announced its decision to leave Russia. “In July OPIC’s management suspended consideration of any investments in Russian projects and the provision of guarantees for investments. The company also decided not to dispose of those assets which we have already entered into, and we will abide by all the agreements we already have, but that’s all, “- said Charlie Stadtlander, the official spokesman of OPIC.

The Blackstone Group LP is the world’s largest privately held company in direct investments, managing $279 billion. In September, it announced that it was leaving the Russian market because over the previous three years it had not found any attractive investment projects. The Group decided not to renew contracts with consultants who had been advising the Group on the development of business in Russia. They were reacting to the “freezing” of Western investments in Russia and the sanctions imposed by the United States and the European Union against several large companies in banking, oil, and gas sectors. «Blackstone did not find something to do in good times, it can’t even imagine what it can do in bad times,” sources in the company said.

The American company Adobe, which creates programs for graphics processing, closed its office in Russia. It is assumed that the company decided to withdraw from Russia because of the worsening geopolitical situation: Due to sanctions, some of its deals were scuttled.

According to The Financial Times, foreign investors previously feared Russia because of corruption, government interference in business, and the complex judicial system. Now there are additional factors, such as the American and European sanctions against people close to the Kremlin and state-owned industrial and banking sections.

 

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