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. Last Updated: 07/27/2016

Hermitage Investors Pull Out $500M

Investors in Hermitage Capital Management have pulled out $500 million from the country since it was made public that CEO William Browder had been barred from Russia.

In an interview late Monday, Browder said the pullout was partly due to his troubles with Russian authorities.

Hermitage is the largest portfolio investor in the Russian stock market.

The pullouts, or redemptions, took place over the last three months and make up 11 percent of the fund's total portfolio, Browder said.

Browder, who has gained a reputation as a crusader for shareholder rights in Russia, has been barred from entering the country since last November, when an order was issued branding him a threat to national security.

Browder has recently battled with state-controlled Gazprom over corporate-governance abuses and inefficiency. He also attacked Kremlin-connected oil major Surgutneftegaz over its murky ownership schemes.

Browder's comments Monday came in response to figures in a weekly report by a fund that tracks money movements in emerging markets.

The fund, Emerging Fund Research, reported that Hermitage had lost $529 million in the past week -- nearly one-third of the total losses racked up by emerging markets over the seven-day period. It was one of the worst weeks since the 1998 Asian crisis.

The fund found that $1.3 billion had been lost from emerging markets across the globe last week. Of that, $545 million came from Russia.

The report sparked speculation among investors that a major force behind the losses was investors seeking to exit Browder's fund because of the Kremlin's decision to bar him.

The Kremlin has declined to comment on the affair.

When reached for comment about the independent report, Browder, who is now running the fund from London, said that while the $529 million figure was more or less correct, the redemptions had been made over the last three months and not in the space of a week.

He said the redemptions were recorded last week because that was when the funds were returned to investors.

"Most of this was sold more than two months ago," he said.

He added: "About half of it had to do with my visa, and about half of it had to do with profit-taking."

No one could be reached for comment late Monday at Emerging Fund Research.

When news broke in late March that Browder had been barred, Hermitage had $2.9 billion under management and $1.9 billion in other accounts, according to fund data made available to The Moscow Times. That included the Russian portion of an HSBC BRIC fund.

As of June, Hermitage had $2.4 billion under management as well as $1.7 billion under separate management, according to the company data.

British officials, from the Foreign Office to the London Stock Exchange, have criticized Russian authorities for arbitrarily barring Browder from the country, saying it could dissuade further investment in the country.

Browder said he was still optimistic that his visa problems would be resolved. Despite acknowledging that his conflict with Russian authorities had prompted investors to pull out of the country, Browder insisted they remained confident in Hermitage.

"I'm still growing along with the Russian market," Browder said.