To Russia with love

‘Russia is flavour of the month again,’ Brian Zimbler, cross-border investment specialist and managing partner of Dewey & LeBoeuf’s Moscow office, enthuses. ‘CEOs are asking their boards why they aren’t in Moscow.’ Russia’s foreign capital inflow for 2008 is estimated at between $40bn and $50bn. Meanwhile, its insurance market is set to double between 2006 and 2010, and international funds are buying into property all over the country.

Financing has become more difficult to obtain, but Hogan & Hartson’s Moscow managing partner and corporate lawyer Peter Pettibone says Russia may not be hit hard by the financial crisis. ‘Russia is sitting on a great deal of oil and gas,’ Pettibone explains. ‘A lot of money is coming in and, although it primarily goes to the state, it also trickles down into the economy.’ As for a Russian sub-prime crisis, few home mortgages exist there and were only given to people with exceptional credit.

But those who know the Russian market well have a word or two by way of warning. Winston Churchill, let’s not forget, described the country as ‘a riddle wrapped in a mystery inside an enigma’. John Balsdon, Russia expert and London-based finance partner at Herbert Smith, cautions: ‘It’s a tooth and claw environment. But you can make an awful lot of money if you do things properly.’

‘Russia is not for the faint-hearted,’ Balsdon warns. Nevertheless, UK firm Simmons & Simmons recently took the plunge, establishing a Moscow presence last September. Others such as SJ Berwin are also looking at the potential for opening there, as are various leading offshore firms; Conyers Dill & Pearman did so in January. Indeed, Balsdon’s own firm is planning to double the number of partners there over the next three years.

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