The U.S. Russia Investment Fund

Last updated
The U.S. Russia Investment Fund
Founded1995
HeadquartersSuite 300, 545 Fifth Avenue,
New York City
,
United States
Key people
 Patricia Cloherty (chairman & CEO)
James Cook (senior vice president) [1]

The U.S. Russia Investment Fund (TUSRIF) was an investment fund from 1995 to 2008. It was established by the United States government to make private investments in the Russian economy. By 2005, it had invested $300 million in 44 Russian companies, including DeltaBank, the first bank to sell credit cards in Russia, and DeltaCredit, the first bank to sell residential mortgages in Russia. TUSRIF was replaced by the U.S. Russia Foundation (USRF) in 2008, while its financial arm, Delta Private Equity Partners, was purchased by Deutsche Bank in 2009.

History

The U.S. Russia Investment Fund was established by the United States federal government in 1995. [2] It was the result of the merger of two funds established in 1993-1994: the $340-million Russian American Enterprise Fund (RAEF) and the $100-million Fund for Large Enterprises (FLEER). [2] [3] Most of the money came from the United States Agency for International Development (USAID). [4] The fund was managed by Delta Capital Management, [5] and its chairman and chief executive officer was Patricia Cloherty. [6]

Its main goal was to promote investments in Russia. [2] It specialized in "early venture, mid venture, and growth capital investments in middle market companies", with a focus on the "media, retail, consumer goods, financial services, information technology, and telecommunication sectors". [7] TUSRIF and Kohlberg Kravis Roberts & Company owned 51% of the Imperial Porcelain Factory until 1999, when it was nationalized by the Government of Russia. [8]

In 2000, it established DeltaBank, the first bank to sell Visa credit cards in Russia. [6] [9] In October 2000, it became a majority shareholder of the European Bank for Reconstruction and Development. [4] Meanwhile, they acquired JPMorgan Chase's banking license in 2000 and established DeltaCredit, the first bank to sell residential mortgages in Russia, in 2001. [6] [9]

The same year, it established the Delta Russian Fund, whose aim was to attract $150 million in venture capital from investors to reinvest in the Russian economy. [4] It also invested in Runet, the Russian internet. [10] The following year, in 2002, it invested $1 million in Egar Technology, a financial trading company, [11] while the International Finance Corporation invested $1.5 million. [12] In 2004, GE purchased the TUSRIF-managed DeltaBank for $150 million. [13] [14]

By 2005, TUSRIF had invested $300 million in 44 Russian companies, including the aforementioned DeltaBank and DeltaCredit as well as two television networks. [6] However, DeltaCredit was acquired by the Société Générale for $100 million that year. [15] Meanwhile, TUSRIF also invested in small businesses, for example in Nizhny Novgorod. [16]

TUSRIF was replaced by the U.S. Russia Foundation (USRF) in 2008. [2] Meanwhile, Delta Capital Management, which became Delta Private Equity Partners, was purchased by UFG Private Equity, a subsidiary of Deutsche Bank, in 2009. [17] Three years later, in 2011, the disposal of $150 million from the fund was tabled by the United States Agency for International Development (USAID) and the United States Congress, on the recommendation from the Obama administration that half should go to the United States Department of the Treasury and half to support American values in Russia. [18] By 2012, the Obama administration asked Congress to allocate only $50 million to support human rights non-profit organizations in Russia. [19]

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References

  1. ↑ Chazan, Guy (July 30, 1999). "Mortgage Loans Sweep Russia; New Concept Yet to Be Tested". The Wall Street Journal. Retrieved October 29, 2016. "We've estimated that it's a multitrillion-dollar market," says TUSRIF Senior Vice President James Cook.
  2. 1 2 3 4 "About USRF". The U.S. Russia Foundation. Retrieved October 27, 2016.
  3. ↑ Bandow, Doug (September 19, 1996). "Uncle Sam as Investment Banker: The Failure of Washington's Overseas Enterprise Funds". Cato Policy Analysis. No. 260. Cato Institute. Retrieved October 27, 2016.
  4. 1 2 3 Koriukin, Kirill; Mazurin, Nikolai (February 1, 2001). "U.S.-Backed Venture Fund to Raise $150M". The Moscow Times. Retrieved October 28, 2016.
  5. ↑ Varoli, John (July 16, 2001). "TECHNOLOGY; Russia Tries To Catch Up". The New York Times. Retrieved October 27, 2016. Delta Capital is among Port.ru's backers. It also administers the U.S.-Russia Investment Fund, which is based in New York and was established by Congress in 1994 with $440 million of grant money for Russian ventures.
  6. 1 2 3 4 "U.S. Policy Towards Russia". U.S. Senate Committee on Foreign Relations. June 21, 2005. pp. 3–12. ISBN   9781422334287 . Retrieved October 27, 2016. Statement of Patricia Cloherty, Chairman and CEO, The U.S-Russia Investment Fund, and Chairman and CEO, Delta Private Equity Partners, New York and Moscow
  7. ↑ "Company Overview of The U.S. Russia Investment Fund (TUSRIF)". Bloomberg. Retrieved October 27, 2016.
  8. ↑ Banerjee, Neela (October 16, 1999). "INTERNATIONAL BUSINESS; Frustrated, Russian Securities Regulator Resigns". The New York Times. Retrieved October 27, 2016. Mr. Vasiliev's decision to leave was clinched by a St. Petersburg court's decision on Monday to renationalize the Lomonosov porcelain factory, a move that annulled a 51 percent stake held in the company by executives of Kohlberg Kravis Roberts & Company and the U.S.-Russia Investment Fund.
  9. 1 2 "James Cook, Father of the Russian Mortgage". Passport Magazine. May 2007. Retrieved October 22, 2016.
  10. ↑ Varoli, John (July 16, 2001). "TECHNOLOGY; Russia Tries To Catch Up". The New York Times. Retrieved October 28, 2016.
  11. ↑ "Company Overview of EGAR Technology, Inc". Bloomberg. Retrieved October 27, 2016.
  12. ↑ "IFC and Delta Capital/The U.S. Russia Investment Fund Finalize Investment in EGAR Technology". International Finance Corporation. September 16, 2002. Retrieved October 27, 2016.
  13. ↑ Ostrovsky, Simon (August 13, 2004). "GE Buys DeltaBank for $150M". The Moscow Times. Retrieved October 28, 2016.
  14. ↑ "GE to Buy DeltaBank to Enter Russia". The Los Angeles Times. August 12, 2004. Retrieved October 28, 2016.
  15. ↑ "Building Mortgage: Pamplin alumnus James Cook has been in on the ground floor of Russian influence" (PDF). Pamplin College of Business. Fall 2008. p. 6. Retrieved October 31, 2016. The mortgage bank, DeltaCredit, became the top mortgage bank in Russia; in 2005, the French Société Générale acquired it for $100 million.
  16. ↑ Chipman, Andrea (October 30, 2000). "Small Businesses Redeem Reputation Of the West's Russian Loan Programs". The Wall Street Journal. Retrieved October 30, 2016. The expansion of small businesses in Nizhny Novgorod and other cities across Russia is due in large part to two large foreign investors -- the EBRD and the U.S.-government financed U.S.-Russia Investment Fund.
  17. ↑ "Company Overview of Delta Private Equity Partners". Bloomberg. Retrieved October 28, 2016.
  18. ↑ Runde, Daniel F. (November 3, 2011). "The U.S.-Russia Investment Fund and the $75-million Question". Center for Strategic & International Studies. Retrieved October 27, 2016.
  19. ↑ Herszenhorn, David M. (March 15, 2012). "U.S. Seeking Use of Funds to Aid Russian Democracy". The New York Times. Retrieved October 27, 2016.
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