MOSCOW, October 20 (Reuters) - Russian businessman Andrey Filatov, who has interests in transportation, mining, infrastructure and real estate development assets, is establishing Tuloma Investment Company valued at US$150-200 MM, which intends to invest in Russian public and non-public assets in the backdrop of capital outflow from Russia.
In 2014, net capital outflow from Russia, which is suffering from a deep economic crisis, reached US$154 billion. The Economic Development Ministry expects the outflow to drop to US$72 billion this year.
«I believe that [Russia] risks are more than acceptable, and returns are fantastic», said Filatov in a telephone interview with Reuters.
According to Forbes, Filatov ranks 112th in the list of Russia's wealthiest businessmen, with a fortune of US$850 million.
«There are great opportunities in Russia today, because of capital outflow. I believe Russia is currently the country offering the highest return on capital.»
Large construction projects such as the US$55 BN Power of Siberia pipeline, the US$27 BN Yamal LNG project, new projects of Sibur, Lukoil, Fosagro and other companies will shape the demand for capital, according to the businessman.
«Russian exporters are in a great shape after devaluation of the ruble, their shares are resilient. Even the government is trying to appropriate their benefits from devaluation through taxes.»
The capital of Tuloma Investment Company will be formed from the shares of public companies, such as Lukoil, Novatek, Surgutneftegaz, Norilsk Nickel, Megafon, Fosagro, as well as bonds, shares in non-public companies owned by Filatov, and a monetary contribution, the amount of which he did not disclose.
«Russian exporters offer a dividend yield of not more than 5 per cent, and consequently I expect to achieve a much higher yield. My expected IRR (internal rate of return) is 16% annually.»
Filatov intends to contribute to Tuloma all his shares, except for Globaltrans and Global Ports shares, which he co-owns with his partners Nikita Mishin and Konstantin Nikolaev.
Those will be minority stakes in the anthracite producer South Coal Company, the petroleum products terminal Pskovneft-Terminal, the logistics company Intergate Logistics AG, the e-trading platform Fabrikant, the railway company Passenger Transportation, as well as 4 real estate development projects in Nizhny Novgorod, St. Petersburg, Moscow and the Moscow region.
«The company is expected to receive capital and asset contributions totaling approximately US$150-200 MM», said Filatov.
Filatov also said that at a later time, Tuloma might also receive the 7% stake he owns in the oil and oil products rail transportation market leader Transoil, which is controlled by billionaire Gennady Timchenko.
Tuloma wants to offer investors a financial product that will provide insurance against the risk of low liquidity of Russian assets, which will make such investments an alternative to less profitable accounts in foreign banks.
«Why isn't the willing capital coming here (to Russia)? The main reason is liquidity. We will be able to guarantee exit after a certain period of time, against 50% of yield, for example».
With a dividend yield of 6%, the investor will receive a 3% yield plus a guarantee of repurchase of shares in case of low liquidity, according to Filatov. And if the share price increases, profits from the sale will also be split in half.
Filatov, who owns shares in Globaltrans, which transports cargo of major exporters, and Global Ports, the container handling business of which depends on consumer demand, believes that the Russian economy will go through the crisis relatively painlessly, and sees signs of recovery in consumer demand:
«I believe consumption has already hit the bottom. Because exporters are key employers, and they are doing well.»
«The demand for housing, especially economy class housing, is returning. I am pleased with these investments (in development projects)», - he said, acknowledging that «consumption will not grow during a certain period of time».
He hopes that the Russian economy will be getting support from corporate investment projects, which will shape domestic demand, fill capacity of steel, coal and transport companies, as well as help to avoid the impending issue of overproduction of steel on the global market.
«For example, Power of Siberia fills capacity of our pipe industry, and through the pipe industry, our steelmakers, steel rollers and coal miners. In this regard, the outlook for Globaltrans is pretty good too, as freight volumes are poised to grow».
In the first nine months of the year, Russia's rail freight volume decreased by 1.4 percent.
Andrey Filatov has completed the consolidation of his assets into Tuloma Investment Company LLC (“Tuloma IC”). Tuloma IC now holds the entrepreneur's shareholdings in Russian companies as well as a portfolio of securities by various issuers.
Established by Andrey Filatov in 2013, Tuloma IC specializes in investing in public and private Russian assets across a number of sectors. Tuloma IC currently manages investments in companies operating in strategic sectors such as transport, infrastructure, oil refining, real estate development and innovations. Tuloma IC is also involved in raising capital for Russian enterprises, a promising business area.
Tuloma IC’s investment strategy and asset portfolio structure are based on the experience of its founder in successfully establishing and developing Russian assets. In addition to the 100% stake in Tuloma IC, Mr. Filatov also owns stakes in Globaltrans Investment PLC, the Russian freight rail operator listed in London (LSE ticker: GLTR), and shares in Russia’s largest container terminals operator Global Ports Investments PLC (LSE ticker: GLPR). The assets consolidated in Tuloma IC are Mr. Filatov's independent investments and do not include his shares in Globaltrans and Global Ports.
The investment portfolio of Tuloma IC includes shares in Coal Mining Limited, Fabrikant.ru, Pskovneft-Terminal, real estate development projects Volgo-Okskaya Investment Company (VOIC), Pushkin, StroyEngineering Development, and the shares of issuers including Fosagro, Novatek, Megafon, LukOil, SurgutNefteGas, Norilsk Nickel and others.
Andrey Filatov, founder and Chairman of the Board of Tuloma IC, views Russia as currently one of the most attractive regions for financial investments: “The high demand for capital, value adjustments across Russian assets given the backdrop of the rouble devaluation, and the growth potential in strategic sectors of the Russian economy together create significant opportunities for investors. From a strategic perspective, investments in sectors such as transport, infrastructure and oil refining allow for more attractive potential returns than in any other market. The objective of Tuloma IC is to attract capital into the Russian economy, by offering extensive expertise of the Russian landscape and, in time, enabling parties to invest together.”
Andrey Filatov is a Russian businessman, Chairman of the Board of Tuloma Investment Company LLC, and co-owner of Globaltrans and Global Ports. Mr. Filatov is also President of the Russian Chess Federation (RCF) and Vice President of the International Chess Federation (FIDE).