Russian Venture Company

Independent opinion (Venture gets registered", magazine "Expert", in Russian):

The Russian venture company was built following the principles of the Israili programme "Yozma". This so called "fund of funds" operate in 1993-1996. The main differences between the two are: size ("Yozma" has 100 million US dollars less capital); rate of profitability (the rate of the Russian company was lower, 5%, however still lower than inflation, while the "Yozma" money was given out under LIBOR + 1%); and the operating arrangement with the funds - "Yozma" would pursue negotiations with each fund separately, while RVC selected the funds in the course of various tenders. Apart from this, the systems are similar and even Mr. Igal Erlikh, who used to be the organiser of "Yozma", now sits on the board of directors of RVC.

It has been decided to use the fund of the funds scheme in order to prevent corruption. It is the opinion of the management of the Ministry of Economic Development (which in its turn refers to the experience of other countries) that such an arrangement of operations transfers the decision making from government officials to the private sector. Apart from Mr. Igal Erlikh, the board of directors of RVC has yet another foreign member, Mr. Esko Aho - head of the Finnish state venture programme "Sitra".

Russian Venture company invests in venture funds on the following terms:

1. RVC invests 600 million to 1.5 billion rubles
2. RVC share of the fund assets - 49%
3. Venture fund is established as a closed end mutual fund in the jurisdiction of Russian Federation.

The investment -declaration of the venture fund must include the following rules:

1. The fund invests in innovation companies only;
2. At least 80% of fund's resources must be invested in the companies at an early stage;
3. Diversion: the fund should invest in at least 8 innovation companies within a 5 year period;
4. Interdiction on investment in the "defective industry" and the traditional branches of the economy;
5. Total compensation of the managing company, specialized depositary, entity responsible for conduction of the register of investment shares, the auditor and the appraiser in one year should not exceed 2,5% of the fund's assets' value.

Detail

In accordance with the decision taken by the board of directors of the joint stock company RBK dated the 11th of May 2007, the following legal entities, having won the competition, became the trust managers of the financial assets of RBK, which they will use to invest in national innovation companies through the mechanism of the venture funds:

• "VTB Asset Management" stock company with an announced value of venture fund of 3 billion 6 million roubles;
• Managing company "Bioprocess Capital Partners Ltd" with an announced value of venture fund of 3 billion roubles;
• "Finance Trust" joint stock company with an announced value of venture fund of 2 billion roubles.

The financial share of the Russian venture company taking part in the establishment of the venture funds will sum up to 1 billion 499 million 890 thousand roubles, 1 billion 470 million roubles and 980 million roubles respectively, which amounts to 49% of acquired pies in the funds which are being established. The rest of the resources, that is 51% of the total value of each fund, the winning companies should try to acquire from the private sources, taking into account the fact that at least 1% must be acquired in accordance with the Rule on the competitions selecting the appropriate managing company by the venture specialists. Thus, it has been decided by the board of directors on the 11th of May 2007 that the winning companies of the first competition will be receiving 3 billion 949 million 890 thousand out of 4 billion 800 million roubles. The rest 850 million 110 thousand roubles will be transferred onto the next competition.

Fund “VTB — Venture Fund”

Russia’s first venture capital fund “VTB — Venture Fund” reached last Friday, September 21, a NAV of RUB 3.061 billion, which means it is now closed and ready to invest, announced VTB officially.

The fund is going to invest primarily in high-growth companies dealing in IT, innovation, nano- and biotechnologies, and other innovation areas. Each project will receive RUB 50 to 400 million, and the exit horizon will be 3 to 7 years.

News release
Official page

Bioprocess Capital Partners Management Company

Russia’s second venture fund reached today, December 19, 2007, a NAV of RUB 3 billion, part of it contributed by the Open Joint Stock Company “Russian Venture Company” (OJSC “RVC”). This means that this closed-end unit fund of high-risk (venture) investments under management of Bioprocess Capital Partners Management Company (Limited Liability Company) has been closed and is now ready to invest.

The fund’s primary targets will be high-growth companies dealing in priority areas of public innovation policy, such as biotechnologies, fine chemistry and telecommunications. Approximately 50% of the fund will be invested into living systems and biotechnologies. A third of the fund will be injected into fine chemistry and telecommunications. The rest will be invested into the priority areas of Russian science, technology and engineering, and the companies whose products are included in the Russia’s critical technologies list.

Official page (in Russian)

Refusal to establish Tamir Fishman Russia Venture Capital Fund

The European Bank of Reconstruction and Development (EBRD), the Russian Venture company (RBK) and the Israeli company Tamir Fishman have withdrawn from the creation of the Tamir Fishman Russia Venture Capital Fund. The official reason for the termination of the contract is "the declaration of the minority shareholder of the fund’s managing company, Mr. Oleg Shvartsman" and the desire of the EBRD and Tamir Fishman to keep their reputation clean.

The official press-release
Article on the refusal to establish the fund in the newspaper "Kommersant" (in Russian)

The Board of Directors of the OJSC “Russian Venture Company” has resolved to set the maximum amount of funds to be spent to acquire venture fund units at the 2nd Competitive Selection at RUB 9 billion.
The date of the Competitive Selection and the competitive documentation will be approved at the Board Meeting scheduled for March 6, 2008.