UK firms urged to invest in Russian regions

The buzzword at this week's Russo-British investment forum in Moscow is diversification. Fund managers are being told of the opportunities for big returns by moving away from energy into untapped sectors and regions.

Britain is Russia's largest foreign investor and British companies have invested more than $US 15 billion into Russia in the first half of 2007 alone. 

To match that, more Russian companies are starting to invest in the United Kingdom to go with the increasing number of companies adopting London as the place to gain access to international capital by listing on the London Stock Exchange.

Until now the bulk of the investment flow between the two countries has focused on energy and large companies. But this is changing as smaller enterprises look to move into new sectors, especially the retail, property and IT markets.

“We have more smaller Russian companies trading and investing in the UK and more companies and more interest from UK companies in Russian regions. Everybody knows about Moscow and St. Petersburg, but we need to get UK investors and small UK companies more interested in investing in the regions,” says Tim Aggar, RBCC President.   

Energy investment will remain a strong link between the two countries, with BP and Shell  already prominent in Russia and looking to increase their presence here.

“We have a strategic co-operation with Rosneft and, also, we are in the process of looking at heavy oil development opportunities with TatNeft – both, of course, are very good companies to work with.  Where I would say the opportunities are going to be looking forward, are particularly in the Russian off-shore – which is a huge resource space, very challenging and, as I suggested at the conference, the equivalent of developing seven North Sea bases,” said Chris Finlayson, Chairman of Shell Russia.  

The conference has heard that despite the positive outlook, there are still issues to be addressed, including bureaucracy, infrastructure, and the difficulties faced by British companies in moving away from Russia's major cities and into the regions.

With business ties strengthening and Russia's economy booming, the conference has heard that the future is bright for investment between the countries.