Thursday, April 27, 2006
LSE head in written warning to Putin
The head of the London Stock Exchange has taken the extraordinary step of writing to Vladimir Putin, Russia’s president, on behalf of Russia’s largest foreign investor, who has been denied permission to enter the country since November.
In her letter, a copy of which has been obtained by the Financial Times, Clara Furse, LSE chief executive, warns that Moscow’s decision to bar William Browder, who runs Hermitage Capital Management, an investment fund, may do “significant damage to Russia’s reputation”.
Ms Furse’s decision to write directly to the Russian president is perhaps the most eye-catching consequence of a skilfully orchestrated lobbying and public relations campaign which has seen Mr Browder also securing the support of Jack Straw, the British foreign secretary, and Jean Lemierre, president of the European Bank for Reconstruction and Development. Both are understood to have raised his case with senior members of the Russian administration.
For the full text of Clara Furse’s letter to Vladimir PutinClick here
Ms Furse says Mr Browder’s exclusion “could have a negative impact on Russia’s image as a country that welcomes foreign investment, and on the ability of Russian companies to raise capital outside Russia”.
She adds: “If the single largest investor in the Russian market can be arbitrarily denied entry into the country, that would send a very negative signal to other parties seeking to invest in Russian companies.”
"If the single largest investor in the Russian market can be arbitrarily denied entry into the country, that would send a very negative signal to other parties seeking to invest in Russian companies" Clara Furse, head of the LSE
Her unusual intervention highlights not only concerns about unorthodox business and investment practices in Russia but also the potential reputational damage to London, which has become the location of choice for Russian companies seeking to raise capital from foreign investors.
In 2005 Russian initial public offerings raised $5.1bn (£2.9bn) on the LSE, accounting for about 14 per cent of all new capital raised there. The wave of listings has confirmed London as a centre for international capital market activities and may explain the willingness of senior political figures like Mr Straw to intervene on behalf of the US-born Mr Browder.
Senior Whitehall insiders conceded the level of contact was unusual but noted that Mr Browder was “a high profile and influential investor in Russia”.
Separately, the Investor Protection Association, Russia’s largest federation of institutional investors, has also written to Mr Putin on Mr Browder’s behalf.
Hermitage is a Guernsey-based investment fund which has been investing in Russia since 1996.
Mr Browder’s exclusion from Russia is all the more surprising because he has been a vocal supporter of Mr Putin’s economic policies at a time when criticism from Western government officials and business executives has been rising.
Ms Furse made this point in her letter to Mr Putin, noting that barring Mr Browder may make it harder for Russian companies to raise capital, “especially given that Mr Browder is widely known as an outspoken supporter of your administration and Russian economic policies.”
However, Mr Browder has also been an outspoken critic of the corporate governance practices of Russian companies and has repeatedly engaged in legal action to defend what he describes as the abrogation of shareholder rights.
Significantly, Ms Furse’s intervention comes just months before state-owned oil and gas giant Rosneft launches its initial public offering on the LSE, which is expected to be the largest IPO ever, raising up to $20bn.
The LSE would not confirm that Ms Furse had written to Mr Putin but commented: “If the LSE has written to the Russian Federation president, it would have been a private matter.”
In her letter, a copy of which has been obtained by the Financial Times, Clara Furse, LSE chief executive, warns that Moscow’s decision to bar William Browder, who runs Hermitage Capital Management, an investment fund, may do “significant damage to Russia’s reputation”.
Ms Furse’s decision to write directly to the Russian president is perhaps the most eye-catching consequence of a skilfully orchestrated lobbying and public relations campaign which has seen Mr Browder also securing the support of Jack Straw, the British foreign secretary, and Jean Lemierre, president of the European Bank for Reconstruction and Development. Both are understood to have raised his case with senior members of the Russian administration.
For the full text of Clara Furse’s letter to Vladimir PutinClick here
Ms Furse says Mr Browder’s exclusion “could have a negative impact on Russia’s image as a country that welcomes foreign investment, and on the ability of Russian companies to raise capital outside Russia”.
She adds: “If the single largest investor in the Russian market can be arbitrarily denied entry into the country, that would send a very negative signal to other parties seeking to invest in Russian companies.”
"If the single largest investor in the Russian market can be arbitrarily denied entry into the country, that would send a very negative signal to other parties seeking to invest in Russian companies" Clara Furse, head of the LSE
Her unusual intervention highlights not only concerns about unorthodox business and investment practices in Russia but also the potential reputational damage to London, which has become the location of choice for Russian companies seeking to raise capital from foreign investors.
In 2005 Russian initial public offerings raised $5.1bn (£2.9bn) on the LSE, accounting for about 14 per cent of all new capital raised there. The wave of listings has confirmed London as a centre for international capital market activities and may explain the willingness of senior political figures like Mr Straw to intervene on behalf of the US-born Mr Browder.
Senior Whitehall insiders conceded the level of contact was unusual but noted that Mr Browder was “a high profile and influential investor in Russia”.
Separately, the Investor Protection Association, Russia’s largest federation of institutional investors, has also written to Mr Putin on Mr Browder’s behalf.
Hermitage is a Guernsey-based investment fund which has been investing in Russia since 1996.
Mr Browder’s exclusion from Russia is all the more surprising because he has been a vocal supporter of Mr Putin’s economic policies at a time when criticism from Western government officials and business executives has been rising.
Ms Furse made this point in her letter to Mr Putin, noting that barring Mr Browder may make it harder for Russian companies to raise capital, “especially given that Mr Browder is widely known as an outspoken supporter of your administration and Russian economic policies.”
However, Mr Browder has also been an outspoken critic of the corporate governance practices of Russian companies and has repeatedly engaged in legal action to defend what he describes as the abrogation of shareholder rights.
Significantly, Ms Furse’s intervention comes just months before state-owned oil and gas giant Rosneft launches its initial public offering on the LSE, which is expected to be the largest IPO ever, raising up to $20bn.
The LSE would not confirm that Ms Furse had written to Mr Putin but commented: “If the LSE has written to the Russian Federation president, it would have been a private matter.”
