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11 Jun, 2009 14:06

Russian companies look to buy up globally

Gazprom says it’s received an offer to buy a stake in Slovenia's largest fuel retailer Petrol while the nation's economy minister refuses to sell it. Last month Russia’s Sberbank bought into Germany’s carmaker Opel.

Developed countries need money, developing countries have it. This is how analysts see Sberbank’s acquisition of a 35% stake in Germany’s flagging carmaker Opel.

But German Gref, the head of state lender Sberbank, says having enough money is not a sound reason for snapping up failing foreign assets.

“There is not much brain needed to buy something, the main thing is to manage it afterwards. To be honest, our management potential will not allow many deals to be successful. I don’t think we will see a lot of such acquisitions, unfortunately. “

Experts also agree on this and say buying into advanced western companies is the only way to modernize some of Russia’s outdated industries, as part of the government's strategy of diversifying away from natural resources.

With western expertise and modern assets, Russian industry should become more competitive in the global market. But not all foreign companies in trouble are ready to share their expertise in exchange for Russian money. Russian companies have tried to buy into, or buy outright, a number of global firms in recent years, but have often been rebuffed, sometimes on political grounds.

But that's likely to change in future. Yaroslav Lissovolik, Chief Economist at Deutsche Bank Russia, says the only way out of the economic downturn, for Russia and other countries, is a more open economy.

“Even if there is still protectionist inertia, it will have to be given up because of the simple reality of life. The developed world needs money which is in the developing world. If the world economy wants to survive, crisis countries will have to open to more investment and trade in goods and services.”

The government wants Russia to acquire foreign assets, and is setting up a special company headed by a former JP Morgan top manager to do so. The question is how much Russia will buy and that depends on whether other nations believe that these acquisitions are strictly business.