The hedge funds that focus on investing in Russia will drop by 50% next year. The hedge funds in Russia will become more like private equity funds and make investments in private companies. Due to decreased asset valuation, the funds shall return more than 40 percent per year, according to Oleg Zhelezko, the founder and CEO of Da Vinci Capital Management. He delivered the Russian hedge fund industry market forecast in the SmartMoney magazine.
In spite of the fact that investors in Russia-specific hedge funds have withdrawn $10 billion in Q3 2008 and are expected to withdraw another $10 billion over the next two years, some of major Russia financial institutions such as UFG, URALSIB, and Renaissance Capital are forming new private equity funds to benefit from low asset values in downsizing economy.
In September 2008, Da Vinci Capital invested $10 million for 9 percent stake in child-fashion retailer and wholesale operator Imperia Detstva (Империя Детства) in Moscow. The goal’s to expand its retail operations in both Moscow and regions of Russia over the next three years.
In April 2008, Da Vinci Capital invested $18 million for 17 percent stake in the leading Russian and Eastern European software outsourcing service provider EPAM Systems.