With Russia poised to become Europe's second largest economy, its corporations are hungry for a share of the world market. Some have entered the global business lexicon: Gazprom is number three on Forbes' worldwide corporations list, Rosneft recently held one of the world's largest IPOs in history, while others are only beginning to develop a global image. Here we list 10 established and emerging Russian corporations, along with key people and ideas.
WIMM BILL DANN
Specialization: Food Processing
IPO: February 2002, NYSE
Key Executive: David Yakobashvili
Market capitalization after IPO: $960 million
When most Russian companies struggled to avoid bankruptcy in the early 1990s amid economic recession, Wimm Bill Dann's growth seemed unexplainable. It conducted an IPO in 2002 on the NYSE and has subsequently seen its business expand to include several local dairy firms. Today, the company owns 37 processing plants in the former Soviet Union that serve over 280 million customers worldwide.
RUSAL
Specialization: Mining and Metallurgy
IPO: pending
Key Executive: Oleg Deripaska
Rusal was formed in 2007 following the merger of Russian mining companies Rusal and SUAL and the alumina assets of Swiss firm Glencore. As the world's largest aluminum producer, Rusal employs over 100,000 people on five continents. Following a global liquidity crunch, a planned IPO for 2007 was shelved. As the company expands internationally, Rusal has focused on developing value-added products to be used in sectors such as aerospace and packaging.
VTB
Specialization: Banking
IPO: May 2007, LSE
Key Executive: Andrey Kostin
Market capitalization after IPO: $35.5 billion
VTB was born out of the USSR's foreign trade bank (VneshTorgBank) and spurred interest among financial circles when it held the world's largest IPO in 2007, raising approximately $8 billion. It was also considered the most `public' IPO because 120,000 Russians bought VTB stocks. Banker magazine recently rated VTB the 116th largest bank in the world in terms of capital.
GAZPROM
Specialization: Oil and Gas
IPO: October 1996, New York (NYSE) and London (LSE) stock exchanges
Key Executives: Alexei Miller and Dmitry Medvedev
Market capitalization after IPO: unknown
Emerging out of the USSR Ministry of the Gas Industry, Gazprom originally listed 1.15% of its shares on Western financial markets in October 1996. The time between that and the appointment of Alexei Miller in 2001 was marred by a series of scandals. Since 2001, the company has instigated major structural reforms and expanded its activities to media, oil extraction, oil refinement and banking. In 2005, Gazprom bought oil major Sibneft from billionaire Roman Abramovich.
In 2006, following the Russian state's acquisition of a majority of the shares of Gazprom, a 20% cap on foreign investment was lifted, whereupon the company's market capitalization soared. Today Gazprom is valued at $345 billion - making it the world's third largest corporation - and enjoys official monopoly status in Russia for exporting natural gas. Its chairman, Dmitry Medvedev (who seems likely to become Russia's next president in 2008), has announced ambitious plans for the company to reach a capitalization of $1 trillion and to become the world's largest corporation by 2017. Currently, Gazprom is pursuing an aggressive global expansion strategy through a series of acquisitions.
LUKOIL
Specialization: Oil
IPO: August 2002, LSE
Key Executive: Vagit Alekperov
Market capitalization after IPO: $13 billion
Coming out of the ashes of the USSR's Ministry of Fuel and Energy, Lukoil is the vehicle of businessmen Vagit Alekperov and Vitaly Schmidt. In the early 1990s, they implemented several important multinational partnerships. In 2000, Lukoil became the first Russian company to buy an American firm listed on the NYSE with its purchase of Getty Oil. Lukoil has since become the largest oil company in Russia and the second largest in the world in terms of proven oil reserves. It operates over 2,000 gas stations in the U.S. alone, and currently sponsors the NFL's Philadelphia Eagles.
KASPERSKY LAB
Specialization: IT Security
IPO: pending
Key Executives: Natalia and Eugene Kaspersky
Founded in 1997, Kaspersky Lab has been a beacon of hope for the Russian economy. One of the few successful domestic IT startups to achieve international success, today Kaspersky has an extensive support network with offices on three continents. Recently, Kaspersky's Anti-Virus 6.0 was awarded the Editor's Choice in anti-virus software by PC World Magazine. A decision by retailer Sam's Club to market the program along with Symantec's Norton Antivirus software will likely increase the presence of Kaspersky in the Western hemisphere. This summer Kaspersky Lab restructured its board of directors as a prelude to an IPO.
GAZ
Specialization:
Automobiles, Trucks
IPO: pending
Key Executive: Oleg Deripaska
The history of GAZ dates back to a 1929 joint venture between the USSR and the Ford Motor Company. Following acquisition by oligarch Oleg Deripaska in 2000, the company underwent major restructuring and its primary model, the Volga, received a long-awaited facelift.
Appropriately enough, GAZ hired Ford Motor Company top manager David Eggers to serve as its CFO in its modernization drive (he has since resigned from the post).
The company has recently expanded abroad: in 2006, it bought the struggling British van producer LDV and returned it to profitability; it also acquired the production lines for the Dodge Stratus and Sebring models from DaimlerChrysler. An IPO originally planned for 2007 is still in the works.
ROSNEFT
Specialization: Oil and Gas
IPO: July 2006, LSE
Key Executives: Igor Sechin and Sergey Bogdanchikov
Market capitalization after IPO: $79.8 billion
Originally established in 1993, Rosneft was not profitable until 2000. Rosneft has since expanded rapidly under its new head, Sergey Bogdanchikov. It has increased oil production by around 11% annually. In 2004, Rosneft won an auction to buy the remnants of the Yukos oil empire, making it the second largest oil and gas producer in Russia. In July 2006, it held one of the most successful IPOs in world history, raising $10.7 billion on the LSE. Rosneft's current plans include expansion into the Chinese market and becoming one of the global top-three energy giants by 2012.
SITRONICS
Specialization: Information Technologies
IPO: February 2007, LSE
Key Executives: Vladimir Yevtushenkov
Market capitalization after IPO: $2.3 billion
Formed in 2002, Sitronics is the largest IT firm in Eastern Europe and the only hi-tech Russian company listed on a foreign stock exchange. The company specializes in consumer and microelectronics, telecommunications and IT solutions, and has subsidiaries in Ukraine, the Czech Republic, Greece and other European countries. Sitronics benefits from a close relationship with the Kremlin at a time when the Russian government is pumping billions of dollars into hi-tech industries.This special relationship was demonstrated when President Vladimir Putin toured the company's Zelenograd production facility in 2006.
X5 RETAIL GROUP
Specialization: Retail
IPO: May 2005 (as `Pyaterochka'), LSE
Key Executive: Mikhail Fridman
Market capitalization after IPO: $1.99 billion
As Russia's largest retail company, X5 owns over 700 supermarkets in Russia, Ukraine and Kazakhstan. Its story began in 1995, when Mikhail Fridman's Alpha-Group opened a chain of "Perekrestok" supermarkets in Moscow. In 1999, Alexander Girda and Andrey Rogachev opened the first "Pyaterochka" stores in St. Petersburg. The following years saw the two companies' rapid expansion into the Russian regions, and their subsequent merger into the X5 Retail Group in May 2006. Recently, there have been rumors about further mergers and the possible acquisition of X5 by a major international chain, such as Wal-Mart or Carrefour.
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