Vladimir Yevtushenkov, the tycoon driving the prosperity of the Russian market


Russian business and financial updates

Vladimir Yevtushenkov is enjoying new life. A few years ago, the 72-year-old Russian tycoon is now leading the country’s long-dormant stock market after a battle with the state-owned oil group Rosneft threatened to bankrupt his Sistema conglomerate.

Sistema’s main asset is Russia’s largest telecommunications group MTS, which is seeking to list companies, from agricultural producer Steppe and medical clinic Medsi to pharmaceutical group Binnopharm Group (one of the main producers of the Russian Sputnik V Covid-19 vaccine) and MTS’s Bank.

The group’s recent success in other IPOs seems to justify Yevtushenkov’s decision to reiterate his commitment to technology investment after seizing his controlling stake in oil producer Bashneft in the state in 2014.

Sistema’s co-owned e-commerce site Ozon has doubled in value since it went public last year, while paper maker Segezha’s revenue in the most recent quarter after its own IPO increased by 45% year-on-year.

At the same time, MTS, Sistema’s crown jewel, is joining a race to create a technology-based “ecosystem” that provides customers with everything from financial services to streaming entertainment.

“We have lived in the past… the ideal of being self-reliant and relying on our own funds. And we are not an investment company,” Yevtushenkov told the Financial Times. “Now, people understand that we will not lose our own money, nor will we lose other people’s money.”

Although many of Sistema’s technology investments take years to become profitable, Yevtushenke said these investments have been offset by traditional assets in his portfolio. “We are not worried. If we mess up with Ozon, then another business will help us through the storm. Our advantage lies in our diversity.”

Today, Sistema is co-investing with state-owned banks and is attracting more funds for its venture capital arm when considering future IPOs-partly because of the recent surge in Russian retail investors.

“The market is very unstable, bank deposit rates are close to zero, and inflation is quite serious,” Yevtushenkov said. “So people seek safety when buying and selling stocks, because if you guess it right, it will bring them a lot more income than depositing money in the bank. It’s like a drug. You’re addicted and you can’t stop it. .”

Yevtushenkov, a former Soviet factory engineer, started trading oil and computers with colleagues in the Moscow Mayor’s Office at the beginning of the Russian capitalist era. For many years, he had a close relationship with Yuri Luzhkov, the then mighty mayor of Moscow, even though the two fell out in 2004.

Unlike many oligarchs, Yevtushenkov has won the applause of investors for his commitment to the open market and corporate governance, which is rare in a country where boards of directors often hold ceremonies and shareholders pay high dividends for themselves.

Sistema is Russia’s largest listed diversified holding company. Last year, it made Detsky Mir, a children’s goods retailer, the first Russian company to acquire 100% of its shares through its free float, although an investor has since held a 30% stake.

Other oligarchs see Yevtushenkov as the vane of the Russian business community, which is dissatisfied with years of stagnant economic growth and declining consumer purchasing power.

After the United States and the European Union imposed sanctions on the annexation of Crimea in 2014, the Kremlin strengthened the country’s control over the economy and tried to reduce the company’s dependence on Western funds, so the call for reform was basically ignored.

Yevtushenkov was placed under house arrest for several months that year on charges of illegally privatizing Bashneft, which was later revoked. After a protracted legal battle and the intervention of President Vladimir Putin, Sistema agreed in 2017 to pay $1.7 billion in damages to Rosneft, which purchased Bashneft from the state a year ago for alleged divestiture.

Mainly because of the transaction with Bashneft, the conglomerate’s debt was approximately 210 billion rupees ($2.9 billion), and Yevtushenkov said that this burden prevented Sistema from reinvesting in its business.

After Putin criticized companies for collecting record dividends, the issue of corporate reinvestment became particularly acute in Russia this year. Then, as the prices of staple foods such as grains soared-the grasslands are one of Russia’s largest producers-Prime Minister Mikhail Mishustin blamed the increase in prices on the “greed” of merchants.

The sharp comments gave the Russian business community a chill. A survey conducted by the President’s Security Service in May revealed that more than three-quarters of business owners are concerned about unfounded criminal prosecutions.

Speaking of Putin’s remarks, Yevtushenkov said: “We have always followed what the president said.” “We didn’t actually pay any dividends because companies always need capital.”

American investor Michael Calvi, whose Baring Vostok private equity fund and Sistema co-own Ozon, was sentenced to six years of probation for corruption last month. The case against Calvi is widely regarded as a sign of how Russia’s investment environment has retreated to the priority of the security sector.

Yevtushenkov stated that these legal issues are part of doing business in Russia. “To tell you the truth-I could have stopped investing. But I survived. I think Calvi is a tough guy. He will survive, and he will continue to invest,” he said.

Yevtushenkov, who regards commerce as a “minefield,” has been living in peace with abiding by the rules of the state.

“The state has the right to make any decision that a company may like or dislike… There may be some unpleasant consequences for someone-for us. But this is life,” he said. “Enterprises should serve the national interest. Once it ignores this, unpleasant things will always happen.”


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