Russia’s time has come

Feb 01, 2011 12:00 AM

By John Bonar

With oil revenues above $ 100 p.bl for the first time since the crisis, PepsiCol buying Wimm Bill Dann for its dairy technology, Russian opposition groups receiving official permission to hold protest rallies, state oil company Rosneft forming a ground-breaking strategic alliance with BP and a veritable pipeline of Russian IPO’s headed for London, Russia is climbing rapidly out of the economic crisis and welcoming international investment and cooperation.

France and Germany have already welcomed Russia as an economic partner, Norway has opened its borders to Russians living nearby and Britain should finally move on from the cold war attitude that seems to permeate much of the foreign office, the security services and mainstream media and seize the opportunity to build a fundamentally new relationship with the BRIC on the doorstep.

As usual, business is leading the way in a momentous fashion. Topping the bill is the historic agreement between one of the great multinational energy companies, BP, to resolve its future by forming a strategic partnership with Russia’s state oil company, Rosneft. The action in UK court by the Russian oligarch partners in TNK-BP are an attempt to either force a new deal for the company or to force the acquisition of TNK-BP by state energy giants Rosneft or Gazprom. It is a minor irritation not a major stumbling block to the government drive to modernize while developing the energy sector.

Another Russian state corporation swooped on Plastic Logic a high-tech company spun out of Cambridge University. The company had located its first manufacturing plant in Germany and relocated its HQ to California but it was Russia’s Rusnano which stepped in with a $ 650mm investment guaranteeing the 100-strong R&D unit in Cambridge.
A host of Russian companies are looking to realise ambitions to launch initial share offerings in 2011 after a nascent market recovery in 2010. Four private issuers are expected to start book building in London and Moscow to raise a combined $ 3bn in February 2011, more than half the amount raised in the whole of 2010. Up to 20 IPO’s are planned for Russian companies in 2011 and London is where most are headed earning book builders, lawyers and accountants a treasure pot of fees.

British Prime Minister David Cameron and Foreign Secretary William Hague are being quietly urged to stop vacillating and follow the example of France and Germany in understanding that Russia is a country in transition. Russia’s democratic imperfections are acknowledged by President Medvedev but his determined enthusiasm to eradicate corruption and install the rule of law should be encouraged while a more open policy will enhance the opportunities and benefits for British business.


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