Banker Builds Investment Firm by Hammering Putin’s Economic Rule

(Bloomberg) -- Prominent financiers in Russia typically avoid criticizing President Vladimir Putin’s economic policies.

Andrei Movchan is building a business out of it.

“The thrust of my clients is partly politically charged,” said Movchan, chief executive officer of the fast-growing Movchan’s Group, which manages more than $100 million for wealthy Russians. “My clients are people who read and watch me, which means that they want to diversify from Russia.”

Movchan, 51, is well known within Moscow financial circles. He was executive director of Troika Dialog, once Russia’s largest investment bank, and board chairman of Renaissance Investment Management, which oversaw $7 billion. He formed Movchan’s Group in 2016 and now advises over 100 individuals, many of them from Russia. He also has 65,000 followers on Facebook, a platform that gives him a microphone to slam Putin and his policies.

Last month, he pointed to the outflow of people and businesses from the country, especially startups, while the state finances inefficient new businesses. In 2018, he was even more candid.

“Putin doesn’t have any policy... Russia is governed by completely rigid administrative system… There is no planning, no personal responsibility and only personal tasks,” Movchan wrote on Facebook.

The Russian economy has nearly doubled since Putin took power in 2000, according to Bloomberg Economics estimates. But living standards aren’t meeting expectations and sanctions imposed since the annexation of Crimea in 2014 have further stunted growth. It’s also one of the most unequal societies in the world with 23 billionaires from the country tracked by Bloomberg worth more than $300 billion.

The government is hoping 2020 will be better, fueled by higher government spending and lower interest rates. The central bank has warned though that Russia won’t be able to significantly revive the economy without structural reform.

Movchan said that he’s never received any pushback because of his harsh criticism, but others have not been so fortunate.

Russia’s biggest bank fired a veteran oil analyst in 2018 after he wrote a report claiming that two of Putin’s close friends were the main beneficiaries of state-run Gazprom PJSC’s $130 billion investment plan.

Sergey Aleksashenko, former central bank deputy chairman and ex-head of a Merrill Lynch unit in Moscow, was stripped of his roles on the boards of two state-controlled companies. He left for the U.S. in 2013.

Movchan is sticking to his central arguement about Russia even after the nation’s equity market last year was the world’s best perfomer on a total-return basis in dollar terms. Its currency was the second-best worldwide.

“I don’t invest in Russian stocks not because you can’t make money there in some moment, but because you can’t make money there in the long run,” he said.

Movchan’s clients are typically businessmen, including retired executives, and those who own franchises. They frequently want to diversify their holdings away from Russia’s economy amid concerns over growth.

“Franchisers have positive cashflow. They are very accurate people who want to invest conservatively,” said Movchan. His group offers two funds: one focuses on short-term liquid debt securities and another seeks risk-free arbitrage. The minimum investment sum is $250,000.

So far his clients are satisfied. Since he started the group four years ago, only $300,000 has been withdrawn while additions to the funds exceed $30 million annually.

©2020 Bloomberg L.P.

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