Russian-style investment in U.S.
The Russian government is justly deemed to be the main Russian investor in the U.S. economy. In July 2015, Moscow spent $9.7 billion on U.S. Treasury bonds. That sum is evidenced by estimates of the U.S. Federal Reserve System and the Russian Finance Ministry.
Prior to that deal, Russia owned $81.7 billion worth of U.S. government bodies. For years, Russia has been one of the top 20 creditors of the United States.
What investment do Russian oligarchs make?
Mikhail Khodorkovsky is in confrontation with the Russian authorities; he is heavily investing in the United States. His foundation, Quadrum Global, operates at least $2 billion assets, including real estate in Manhattan, Illinois and Florida. Khodorkovsky owns nine hotels in the United States with a total capacity of about 2,200 rooms. The assets of the former Yukos CEO also include a number of office buildings in a central area of New York City. Forbes and Bloomberg have repeatedly tried to ask partners of Khodorkovsky and Lebedev a few questions, yet information about U.S. assets of the former Russian oligarchs is being kept secret.
The appetite of another well-known businessman from Moscow, Mikhail Prokhorov, is more modest. This Russian owns the Brooklyn News basketball team. Reports alleging his intention to sell 20% of the club assets which, according to experts, cost at least $1.5 billion have been published lately.
Russian-scale investment in U.S. real estate
Geopolitical difficulties created by both the U.S. sanctions and the Kremlin reaction are prompting many Russian businessmen to invest in U.S. assets. That process has been reported by Russia’s authoritative news agency Interfax, which, in turn, refers to MarketWatch.
Numerous companies helping Russian businessmen adapt to the unfamiliar country confirm that the number of requests from Russian businessmen has more than doubled lately.
Real estate in Manhattan, which has always been very popular with immigrants from the former Soviet Union, is the most sought-after investment. The interest in investing in private business projects and real estate in other U.S. states has also been on the rise in recent years. For instance, real estate in Oklahoma and Dakota, where ‘the shale gas boom’ is gaining momentum, is in high demand.
Russians buy premium real estate
Russians had been spending heavily on real estate even before the sanctions were imposed. For example, Russian student Yekaterina Rybolovleva bought a house for $88 million in Central Park West in December 2011. After the deal was closed, real estate prices in that area were up at least 25%. For comparison, the townhouse of Lebanese Mexican Carlos Slim, the richest man in the world according to the Forbes rating, cost only $44 million.
Brooklyn is another target of Russian investors. The value of closed deals varies from $ 30 million to $218 million.
Before the high-profile $88 million deal, the $40 million apartment of Russian composer and producer Igor Krutoi was the New York real estate market record holder. The apartment of 557 square meters is situated in the Plaza Hotel residence. The deal of Mr. Krutoi is believed to have helped the New York real estate market recover from the crisis of 2008-2010.
Russians have been especially active investing in New York real estate in recent months. The sanctions imposed in the early 2014 are making Russian businessmen less patriotic. The latest deals include a deluxe residence on Union Square, a condominium near the Empire State Building, and an office building in Midtown Manhattan. Brooklyn is another target of Russian investors. The value of closed deals varies from $ 30 million to $218 million.
Russian-style technology shopping
The lifting of the sanctions is unlikely to happen in the near future. In this context, the Russian government is trying to foster substitution of imports. Significant progress in that area has turned out to be impossible without Western technologies. Hence, Russian companies are buying licenses to new technologies, innovative microchip design programs, hardware for manufacturing microelectronic products and other high-tech industrial equipment in the United States.
Bureaucrats from numerous Russian ministries were unwilling to allot public funds to developers only a short time ago but things have changed drastically. Russian businessmen backed by the government can now afford big buys. Their shopping is being monitored by the U.S. government. Some deals are banned for political considerations, and other deals are closed with the help of local lobbyists.
Neither the complicated political ambience nor the cooling in relations between certain representatives of Russian and U.S. authorities have stopped Russian business angels’ investment in American start-ups.
Russians support U.S. start-ups
The information technology market predominantly lies outside the political field although technologies have long become the main weapon of information wars. Neither the complicated political ambience nor the cooling in relations between certain representatives of Russian and U.S. authorities have stopped Russian business angels’ investment in American start-ups. An average investment varies from $200,000 to $1 million. The spheres of interest vary from medical center applications to commodity software.
Some of promising start-ups backed by Russian businessmen
Prosper Marketplace, a peer-to-peer lending service of San Francisco developers, has raised about $70 million. The investors include the Phenomen Ventures Fund of Russian businessman Dmitry Falkovich and the state-run Russian Venture Company.
The Drchrono start-up is tasked to support data exchange between patients and doctors on a specialized platform supported by iPad and iPhone. The project raised $2.69 million, and Russian funds Maxfield Capital and Runa Capital of businessman Alexander Turkot and oligarch Viktor Vekselberg were listed amongst its investors. Russian citizen Yury Milner backed the project at the early stage.
Weaved is another investment of Maxfield Capital, the precise amount of which is not formally known. The ‘Internet of things’ start-up has cooperated with Cisco, Philips, Astak and Lorex. The Russian fund’s investment reportedly does not exceed $1.5-2 million.
As we can see, the Russians have been developing the U.S. economy in a rather energetic manner, to the extent of their modest or sometimes breathtaking abilities. Considering the economic instability and the ongoing sanctions, there is every reason to believe that the relocation of Russian capitals to the U.S. economy will be demonstrating an upward trend in the forthcoming years.