Global Investors Sour On Russia

“If you don’t have to invest in Russia, why would you?” said one private equity executive.

Pool / Reuters

Investors are pulling their money out of Russia, wanting no part of the country's flatlining stock market, declining currency, and massive sanctions.

Patrick Healy, the Deputy Chief Executive Officer of the private equity firm Hellman and Friedman, bluntly said at a conference sponsored by Bloomberg Monday: "If you don't have to invest in Russia, why would you?"

The latest round of European and American sanctions following Russia's annexation of Crimea and support for separatist militants in Ukraine have hit Russia's biggest financial institutions and companies, many of which are either owned by or closely linked to the Russian state.

Alexey Vedev, Russia's Deputy Economic Development Minister, speaking to the news agency Itar-Tass Monday said that, "External and internal political risks may trigger a capital outflow in 2014, which may range from $90 billion to $120 billion."

That estimate was even more dire than one put out by the Deputy Minister of the Central Bank, Ksenia Yudaeva, who said that $75 billion had already left the country in the first half of the year and that number could hit $100 billion by the end of the year, the Financial Times reported.

Russia's currency, the ruble, also slid to new lows Monday to 38.69 rubles to the dollar, falling more than 14% since late June, while the MICEX, an index of Russian stocks, is roughly flat in the last year. By comparison, the Euro Stoxx 50, an index of blue-chip European companies, is up more than 15% on the year.

Nomura analysts said in a note that they expect an "additional drag on investment from the recent geopolitical tensions and sanctions" and that international investors "are looking for an alternative destination."

One of those investors appears to be private equity giant Blackstone. The firm has not rehired the advisors and consultants it brought on three years ago to help find deals in Russia, the Financial Times reported on Sunday.

Blackstone's co-founder and CEO Stephen Schwartzman joined the advisory board of the Russian Direct Investment Fund in 2011, a fund owned by the Russian state along with several other private equity investors. Blackstone spokesperson Pete Rose declined to comment to BuzzFeed News when asked about Schwartzman's membership on the fund's board. Two members of the fund's board left this year. The fund no longer publishes the names of its advisory board members on its website.

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