Jones likes Russia’s (business) climate

Within days of David Jones’s arrival in Moscow in August 1998 to head private equity manager Delta Capital, Russia had defaulted on its debt and the economy had begun tumbling to earth like the rickety MIR space station.

Foreign capital was scrambling to get out of harm’s way. Instead of joining the panic, American Jones, who’d run investment banking boutique Clarendon Capital, focused Delta’s portfolio on what he deemed to be the most promising sectors: financial services, consumer products and telecommunications, media and technology.

Three years later Jones feels vindicated: Delta’s U.S. Russia Investment Fund has invested $220 million in 35 companies and successfully sold off six of its holdings. The fund has seeded fledgling banking, auto leasing and mortgage lending operations, and its residential mortgage business is the first in Russia. Delta has also backed the expansion of supermarket chain Spar in the Moscow area.

Now Jones is hoping to raise $100 million from foreign investors to start moving the fund away from dependence on govvernment sponsorship. Established in 1995, Delta was initially backed by the U.S. Congress to aid in Russia’s transition to a market-driven economy.

“The prospects for investing in Russia are better than ever,” contends Jones. President Vladimir Putin “is pushing the reform agenda, and there is a much better business, legal and regulatory climate than in the recent past.”

He has also found that the former Communist state abounds in budding capitalists. “What makes us unique,” brags Jones,” is the ability to find people in their early 30s who have the right education, attitude and ambition to succeed in business.” Whatever would Karl Marx say?

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