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. Last Updated: 07/27/2016

U.S. Fund to Invest in Privatized Firms

A leading U.S. mutual fund has established a special fund to invest as much as $100 million in privatized Russian companies, the fund's advisers said Thursday.


The Pioneer Group, a Boston-based company which manages assets of $11 billion worldwide, will use Ernst & Young as its lead adviser on the newly established Pioneer Investment joint venture.


Andrei Danilenko, a consultant with the investment projects department of Ernst &Young, said that the joint venture, which will start working in spring, intends to invest about $3 million in between 20 and 25 privatized Russian firms in the first quarter of 1994.


"That would be a touchstone for the company," Danilenko said. "If it works, investments could amount to $100 million."


He said Pioneer Investment aimed to buy a stake in each company big enough to give it a seat on the board of directors, allowing it to play a role in their management and modernization.


Dmitry Kushayev, a director of the mergers and acquisitions department of Ernst & Young, said the company has targeted medium-sized firms, which make products with export potential.


"We do not think that future belongs to raw materials export," Kushayev said. "Besides there is too much state regulation here. So, oil and gas is out of question."


The Boston-based Pioneer Group is the majority investor, holding 76 percent of shares. Other partners will include the Institute for Economic Problems of the Transitional Period and the Association of Private and Privatized Enterprises.