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30 I Special focus bne October 2018
told Vedomosti that "this situation is seen as a point for growth." Market maker of the BPIF Sberbank CIB will be able to buy back the stake in the fund at any point from the investors, boosting its liquidity.
The BPIF plans to raise over RUB3bn ($44mn) in one year and plans to launch another three BPIFs, anchored in state securities, S&P500, and Russian Euro- bonds, respectively.
he established a Russian branch of Templeton Asset Management to build the mutual fund business. However, most of these funds were wiped out in the 1998 crisis where the ruble lost three quar- ters of its value in a month and the RTS index fell from over 500 to a low of 38.
Since then various banks have tried
to reestablish a mutual fund business. Previously the oldest funds were estab-
returns from bank deposits and real estate investments.
But that is starting to change now. With inflation down to historic lows
of circa 3% and interest rates on deposit accounts falling in line with the tumbling cost of capital, the average Russian is starting to look around for new investment opportunities that pay a bit more. The interest in funds has been increasing.
The government has been trying to encourage this trend and has intro- duced “investment accounts” that carry significant tax breaks for small inves- tors prepared to tie up their money in securities. At the same time the Ministry of Finance has been experimenting with the so-called People’s Bond, a fixed income instrument that specifically targets retail investors. Sberbank again (together with VTB) issued the first People’s Bonds.
While no one expects the BPIFs to mush- room, especially amongst battle-scarred retail investors, the timing of the new instrument is good as the tide for invest- ment funds is rising in Russia.
“The BPIF plans to raise over RUB3bn ($44mn) in one year and plans to launch another three BP”
The head of FinEx Vladimir Kreyndel argued to Vedomosti that Russian BPIFs are not exactly ETFs as they still lack key ETF features, such as independent trustees and custodians.
The launch of the BPIF is the latest attempt to create a fund industry in Russia that has always been lacking, and Russian individual investors have never had much luck with funds. The BPIF builds on the closed-end invest- ment funds, known as PIFs in Russia, that were introduced by Boris Yeltsin in 1997, about six months before the 1998 financial meltdown.
Yeltsin’s PIFs caused a great deal of excitement and brought investment stars like Mark Mobius to Russia, where
lished by independent investment bank Troika Dialog that was later sold by its owner Rubin Vardanian to Sberbank and formed the core of the retail giant’s investment arm, Sberbank CIB, that is launching the BPIFs. However, these investment funds never collected much money, partly thanks to the constant shocks investors suffered from due
to the volatility of the Russian securi- ties markets and partly because retail investors have traditionally sought safer
“Investment funds never collected much money, partly thanks to the constant shocks investors suffered from”
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Avast to enter London bourse in bid to raise up to $1bn Jaroslav Hroch in Prague
Avast, which owns the popular consumer antivirus company AVG, will apply to list its shares on the London Stock Exchange in the hope of raising $200mn (CZK4.1bn) in primary proceeds from an IPO, the Czech-founded company announced on April 12.
See page 2
St Petersburg's start-up scene flourishes on high talent and low costs
Contents
Avast to enter London bourse
in bid to raise up to $1bn 1 Avast to enter London bourse in bid to raise up to $1bn 2 St Petersburg's start-up scene
flourishes on high talent and low costs 3 Romania entrepreneur aims to put home-grown UAV defence technology industry on the map 6
FinTech
Russia's mobile major MTS increases stake in Ozon to 16.7% 9
Blockchain
Romanian startups at the heart
of blockchain energy trading rally 10
Central Europe
Russian-Lithuanian startup Gosu.ai
raises $1.9mn from Russian and
French investors 13
Eurasia
Iran hit by cyber attack that left US
flag on screens 14 Iranian government set to block hugely popular Telegram messaging app 15 Iran's black market phone disconnection drive pushes up legal mobile imports 15
Eastern Europe
Internet catches up with TV on Russian
ad market 17 Sales of connected appliances jump
in Russia 17 Russia's HeadHunter Group seeks
to raise $250mn with NASDAQ IPO 18 Russia ranks second in the world
for digital piracy 18 Russian messaging service Telegram raised another $850mn with ICO 19
Southeast Europe
Russia's HeadHunter Group seeks
to raise $250mn with NASDAQ IPO 20
The Regions This Month 21
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Filip Brokes in St Petersburg See page 3