ekaterinburg and sverdlovsk region - Marchmont Capital Partners

A message from MARCHMONT Capital Partners
A Land of Wealth and Creativity
Welcome to the second Regional Profile of our Marchmont Investment Guide to Russia,
dedicated to the capital of the Sverdlovsk region, Ekaterinburg. While the first covered Nizhny
Novgorod, we look now to Ekaterinburg and the Sverdlovsk region, one of Russia’s
richest in rare minerals, iron ore, gold, copper, nickel, oil, gas and precious and semi-precious
stones. But its natural resources prowess does not come at the expense of intellectual
potential; local people have long proved inventive and enterprising both in the extraction
and creative application of these resources.
One of our goals is to explore the region’s economy and introduce you to those bidding
to make their region one of Russia’s richest and most creative. With the third highest percapita
income in Russia, Sverdlovsk is not only a key ferrous and non-ferrous metallurgic
region, it is a general industrial heavyweight where much of Russia’s industrial hardware
is produced.
Ekaterinburg’s mix of natural resources, skilled workforce, industrial potential and
relatively remote location has long made it a defence and production research center –
the legacy from which its strong educational and scientific base, capable of creating and
commercializing world-class technology, has risen. The region has shown too its ability
to adapt to current global business trends and standards; steps taken by regional officials
to help commercialize local technology projects by establishing business incubators and
technoparks is a case in point.
Surprisingly to some, the region has become one of Russia’s top IT producers with hundreds
of firms and entrepreneurs working on advanced software and systems. These are in
constant demand by local and national firms, keen to upgrade and prepare for the domestic
and global competition that Russia’s entry into the WTO will entail. The innovative and
hi-tech climate is supported by a comprehensive university system – with three separate
MBA programs, – which combined includes over 210,000 students, producing over 35,000
specialist graduates each year. This, with the local rise of venture capital investment, is the
foundation on which a new generation of entrepreneurs will flourish.
I first visited Ekaterinburg in 2004 as a guest speaker at the local Elite Club of Corporate
Conduct. I spoke on western corporate governance and how local firms could secure
expansion capital and foreign partnerships. I have since visited more than a dozen times
and always come away impressed by the ingenuity and initiative of local entrepreneurs.
“Communism failed, so let’s embrace capitalism and, when we’ve mastered it, expand our
businesses not only in Russia and Europe but also establish international market share”
- that is their take.
Now they want more than to just sell raw materials; they strive for the new, such as
lighter and harder steel and other innovative building material products. They are increasingly
gaining the skills needed to turn these resources into new products, for new uses,
and which can be marketed internationally.
At Marchmont we see investment into the commercialization of new technology and
the innovative maximization of the country’s natural resources to be the next big thing in
Russia - and in both respects Ekaterinburg and the Sverdlovsk region might be considered
the end of the rainbow.
I have always looked at Russia as being about more than just Moscow and St Petersburg,
and the economic renaissance of cities like Ekaterinburg demonstrates why. It’s my hope
that in publishing this journal others will arrive at this view.
Kendrick White
Managing Principal,
MARCHMONT
Capital Partners, LLC
MARCHMONT Investment Guide to Russia 2007, vol. I, #2
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