UFG Asset Management

UFG Asset Management is a large independent investment company with assets of more than $2.3 billion at the beginning of 2020.

UFG earns by forming funds with different investment strategies:

• direct investment funds in Russian companies and companies in other CIS countries,
• venture capital funds,
• infrastructure investments,
• stock market of stocks and bonds,
• agricultural investments,
• development projects,
• warehouse logistics and
• real estate in Russia.

Qualified international and Russian institutional and private investors contribute capital to these funds and receive income from investment.

• UFG Asset Management
• UFG Private Equity

UFG receives management fees and success fees if the funds exceed the annual return of 5-8% in dollars. If funds don't earn returns for investors, UFG partners don't earn anything.

The company is included in projects for 5-8-10 years and, together with the owners, seeks to increase the volume and cost of the business several times. Then you still need to find a strategic buyer for the company's business or place its shares on the stock exchange.

Return on investment

Investor returns depend on investment strategy and timing. Private equity funds and venture capital funds are designed for investment cycles of ten years. Liquid funds are open to entry and exit at regular intervals.

As for profitability, investments in shares of the largest Russian blue chips UFG Russia Select for seven years, from 2013 to 2019, brought investors + 11.2% of net annual returns in dollars. For comparison, the yield of the RTS index, taking into account dividends for the same period, amounted to + 6.9%.

Our other fund, UFG Special Situations, which invests in Russian stocks and bonds, and also buys shares and debt of private companies, has shown + 7.3% annual growth since 2013.

The return on UFG Private Equity private equity funds in fast-growing and innovative private companies is 15.6% per annum. Investors can expect similar returns from technology and venture capital funds.

Real estate funds (which included land, i.e. agricultural projects) UFG Real Estate brought investors 8-12% of net annual profitability.

Of course, there are also unsuccessful investments, while all the returns that are given in the examples above always take into account the results of all projects in aggregate.

History

2024: Sale of the developer of electronic document management for retail "E-Com"

On May 8, 2024, it became known that the operator of the electronic document management system (EDO) SKB Kontur signed an agreement on the acquisition of Russian business Docrobot, a developer of similar solutions for retail. The amount of the transaction, according to available data, is 1.5 billion rubles. Read more here.

2020: UFG Managing Partner Polina Gerasimenko spoke about the company's business

In February 2020, UFG Managing Partner Polina Gerasimenko in a letter to RBC spoke about the features of the company's business^[1]:

It is important to note that we have never raised budget funds or funds from state-owned companies. We do not invest in government contractors, do not participate in state tenders and do not receive any subsidies from the state.

UFG is the first signatory among direct investment funds in Russia to the PRI Principles (UN Principles for Responsible Investment), based on the long-term interests of the economy, the environment and society as a whole. When investing, we focus on environmental, social and corporate (ESG) contributions to the Russian economy. We are guided by these principles in all our investment areas. Thus, UFG's current investments over five years, from 2013 to 2017, created more than 13 thousand jobs and doubled the number of employees from 14.3 thousand to 28.2 thousand people throughout Russia. We paid more than 44 billion rubles. taxes and invested more than 53 billion rubles. capital expenditures. Over the same period, thanks to revenue growth, private companies in which UFG funds were invested increased the annual volume of taxes to budgets of all levels by 2.6 times, and also increased the volume of capital expenditures by more than 2.4 times a year.

The departure of most foreign investors from the market allows the rest to choose the best projects to invest. During times of crisis, strong companies become even stronger, and weak ones lose market share and become objects of consolidation, i.e. the risk of investment uncertainty decreases, and it is clear which companies to invest in. Those companies that attract financing will become leaders in their sectors, including the ability to expand their export potential. For example, UFG invested in the fast-growing global licensing business of the Russian cartoon Masha and the Bear, and the company directed capital to business development not only in Russia, but also in Europe, Latin America, China and the Middle East. The cartoon brand contributes to the international promotion of Russian success stories.

Also, the promising direction of investment is the stock market of Russian stocks, where dividend yields continue to grow amid lower inflation expectations. The development of Russian capital markets is extremely important for public companies, as it allows them to attract more borrowed capital and direct the attracted capital into innovation, business development and infrastructure. It plays an important role in maintaining economic growth, and also contributes to the growth of long-term pension savings and insurance reserves in our country.

2011: Sale of OFG Invest to Deutsche Bank

Deutsche Bank sold the Russian management company OFG INVEST in two stages, first 40% in 2008. After the sale of the management company, OFG INVEST began to operate under the Deutsche UFG Capital Management brand (but remained under the management of UFG for another three years), and in 2011, after the sale of the remaining 60%, it completely came under the management of Deutsche Bank. Five years later, in 2013, it was bought from Deutsche Bank by the Aton group of companies and transferred under its brand.

2008

Mikhail Mishustin oversees the project in Bryansk "UFG Agro Partners"

One of the projects led by Mikhail Mishustin was the agricultural project in Bryansk "UFG Agro Partners," in which the company began investing in May 2008. There was an abandoned land overgrown with shrubs. And for several years, 38 thousand hectares have organized high-tech agricultural production of wheat, barley, soybeans. The company was one of the largest taxpayers in the region and one of the key businesses creating jobs. More than $30 million of investments were invested in the project, a grain dryer was built, equipment was purchased, advanced Western agricultural technologies were introduced, thanks to which it was possible to more than triple the yield per hectare compared to the yield of agricultural land in the region. Advanced soil-saving technologies for plowing land and crop rotation were used. Subsequently, in 2014, the business was sold to one of the largest Russian agricultural holdings in Russia with an increase in the project cost in ruble equivalent almost twice. The project successfully realized its potential, laid down by partners at the stage of its formation in 2009.

Future Russian Prime Minister Mikhail Mishustin becomes one of the partners of UFG

UFG's controlling partners since its inception have been [former finance minister and deputy prime minister] Boris Fedorov, Charles Ryan and Florian Fenner. In 2008, there were four of them, Mikhail Vladimirovich Mishustin joined them. The company is legally structured for each investment area separately. Each new fund is formed with different investors and different investment objects and exists independently of each other. Within each area, in addition to controlling partners, key managers of this area own minority shares.

In February 2020, UFG Managing Partner Polina Gerasimenko, in a letter to the editorial office, answered RBC's questions about what he was responsible for, how much he earned and why Mikhail Mishustin left the company, who took over as Prime Minister of Russia in January 2020. ^[1].

- As far as I know, when Mikhail Vladimirovich left the civil service, he considered various proposals for the continuation of his career, including from business structures. He came to us in May 2008, at the invitation [by that time already the former Minister of Finance] of the late Boris Grigorievich Fedorov, and then the chairman of the board of directors of the UFG group. I remember that Boris Grigorievich then considered a personal personnel victory that he managed to convince Mikhail Vladimirovich to become a partner of the company.

Fedorov said that he and Mishustin had been friends since 1989, since the time of the International Computer Club. Fedorov very much appreciated Mishustin's ability to build relationships with people and, if you like, his brains and analytical skills. In his opinion, Mishustin, perhaps, one of the few civil servants had an impeccable reputation among the international and Russian business community.

Assets under the management of the UFG group then exceeded $2 billion. But it is important to understand that funds' assets are like deposits in banks, they are not owned by UFG, but by investors who have placed them for long periods in our funds to invest in targeted strategies.

Partner share is UFG's share of future revenue from management and success fees if funds exceed the annual return of 5-8% in dollars. The size of commissions is set by investors and leading world practice. For example, for private equity funds, the management fee is 2% of the funds' assets (covers the costs of maintaining the fund's infrastructure and team), and the success fee is 20% of the return, provided that the annual minimum guaranteed return of 8% is achieved. I will explain for a very simplified illustration: if a fund of $100 million is formed for ten years, during which UFG first invests, and then implements investments with a total income of $300 million, i.e. triples the value of the fund, which exceeds the guaranteed yield, then UFG will earn $40 million as a fee for success, and investors will receive $260 million (i.e. increase their investments 2.6 times). A partner with a 25% stake would be entitled to a portion of that income after deducting all costs of maintaining the funds and team infrastructure. Usually the math is much more complicated, and the income UFG generated is divided in a certain proportion between the controlling partners and the key investment team.

Yuri Kovalchuk buys out UFG stake in News Media

In 2008, UFG sold its stake in the News Media holding to a certain "non-market fund of a technical nature," presumably the "National Media Group" of St. Petersburg businessman Yuri Kovalchuk.

2006: Purchase of a stake in News Media media holding for $40 million

In 2006, Aram Gabrelyanov merged publications under the Life brand in 50 cities of Russia into his holding, selling 50% -1 shares for $40 million to the UFG investment group, one of the co-owners of which is Boris Fedorov, ex-Minister of Finance of Russia. Later, the holding was called News Media (News Media).

Notes