Private Equity as the Secret Sauce in the Recipe for Russia’s Economic Growth
The experience of major developed and developing markets has shown that private equity is a key factor in effectively employing capital in the economy. Private equity investments fuel the M&A (mergers and acquisitions) market and offer exit strategies for venture projects, stimulating the emergence of new and innovative enterprises. Portfolio companies of private equity funds provide a constant flow of new IPOs (initial public offerings), thereby helping to develop the stock market and ensure the reinvestment of funds back into the economy. Thanks to its low base, Russia offers huge potential for international private equity and, given favourable conditions, could see growth reach levels not seen since 2013. In recent years, most direct equity investments have been backed by Russian or foreign sovereign wealth funds, while the role of international institutional investors has declined as large-scale private capital based in Russia has grown. What is correct balance of domestic and international investors for optimum sustainable development in the sector? What regulatory changes should be made concerning private equity activities in order to ensure sustainable growth, and what economic sectors might spark a breakthrough in accelerating private equity deals?
