Ru En

“The U.S. also has roaches, only fewer than we have” – Ruben Vardanyan, investor, advisor to the CEO of Sberbank of Russia

Ruben Vardanyan Troika Dialog Moscow School of Management SKOLKOVO Manager

Date: 29.04.2014

Source: Vedomosti (Internet version)

Redistribution of property in Russia is an inevitable process, since major companies cannot remain ineffective forever, cautions Ruben Vardanyan. Working on Ruben Vardanyan’s latest interview proved in many ways unusual. For example, we met twice. And whereas during the first meeting the suggestion to “discuss the international situation” was seen as a rather funny joke, subsequently the political situation began to change so quickly that we could hardly manage without this discussion.

Vardanyan told Vedomosti how he chooses investment projects, how international investors see the situation in Russia and which fundamental changes the country has long needed. “I think that Russian business in the near future awaits quite a lot of bankruptcies and restructurings, since you cannot eternally inject money into companies bordering on demise and support the owners”, Vardanyan said. Sooner or later we must switch from the model of rescuing owners to the model of rescuing business. This fundamental change must finally happen”. Redistribution of property in Russia is an inevitable process, since major companies cannot remain ineffective forever, including in Russia, Vardanyan cautions.

As whom do you primarily see yourself?

I have undergone quite serious changes: I exited operational and strategic management in the investment banking industry, although I continue to collaborate with Sberbank Group in the role of Advisor to the CEO and Chairman of the Board. Yet on a deeper level, I, as before, seek to do projects relating to changing the economic and social environment, only now I’m doing this through other mechanisms – through investments, through board of directors’ work with companies that interest me, and through charitable and educational projects. So overall nothing fundamental has changed, and moreover my operational workload has decreased. We set up the small boutique Vardanyan, Broitman and Partners, providing services of managing equity stakes in portfolio companies, private-equity and venture investment funds, and advisory services. We also have a real estate fund under management. We will engage in client consulting, sharing our knowledge and experience with them, while also being co-investors in projects. We will enter various projects with my own capital as well as clients’ and partners’ funds.

And who are the “partners” figuring in the boutique’s name?

Presently our company has two partners – me and Mikhail Broitman, previously a managing director at Troika. We’ve worked together for 20 years now; he participated in such major deals as Rosgosstrakh, AvtoVAZ, KAMAZ and more. The rest are employees, but we think they may also become co-owners. Yet please understand that I don’t want to build another Troika. If we are to draw comparisons, this will be more reminiscent of what the Rothschild bank was like a century or two ago. If you look at the model of Rothschild bank, which engaged in M&A deals and advisory, with specific banking operations left aside, the business was based on close relationships and mutual trust. Back then Europe wasn’t united like today, and members of different European countries were quite wary of each other. Rothschild knew everyone in Europe – from businessmen to finance ministers and prime ministers – and could do business with all sorts of people, thus, above all else, fostering stronger ties between the disparate European nations.

The Rothschild model is completely apropos for Russia as well. We live in a transition period, with many processes not yet in place, although 20 years has already elapsed since the changes began in our country. Wariness among different societal groups and between business and investors remains very high. A considerable competitive advantage of mine is that I know many people and many know me as a banker and trust me from both the professional and human standpoints. I likely have more strong aspects under this model than anyone else in our country.

A structure is currently being built which will gather all of my projects in a single platform. These can be split into three groups. The first is commercial projects, such as KAMAZ, Bigfoot (owner of Lamoda), Joule Unlimited and more, where I participate along with my clients and partners. I usually hold a minority stake in these projects with considerable influence, yet I try never to be the main shareholder. My advantage in this area is accumulated experience, professionalism and my clients’ trust. The second group is the family office, that is, provision of services to wealthy families – my clients in such spheres as family governance (financial and legal matters, properties, documents, etc.), family wealth and family lifestyle (organizing leisure, issues of education and health care). The main goal of our service projects is not to maximize revenues for the management company but to render high-quality services and cover own costs. My family office has operated for ten years, with considerable experience accumulated in this sphere. What’s more, I am also one of its clients.

As for philanthropy?

The third type of project involves creating the philanthropy industry in Russia, educational initiatives within the CIS, and developing Armenia. We believe it’s important for the projects to be financially sustainable, and seek to craft models where they will be less dependent upon donors. We also try to avoid the formula “I earn little, so I work as much as possible” and address questions of motivation, so the best people come to work on our projects. This also speaks of trust as the main competitive advantage. People trust me, because they see that I not only raise money for projects, but also invest my own. I have successful projects, and people see these and understand how and through which principles they were done: all the money raised goes to the project, not one kopeck goes to operational costs, no money is stolen and, most important, the collective principle is in place – no one tries to overtake the project. Many think that Vardanyan sold the company and took up philanthropy. This isn’t so. I plan to render services to clients in investment projects, service and philanthropy, while clients will unite around me and receive a commercial advantage and high-quality services, and feel like participants in interesting, vibrant, large-scale projects. I am taking on quite substantial obligations and risks, and everything I did before I am doing now, only more systematically and comprehensively.


Do any restrictions remain regarding future work or participation in specific projects following the deal with Sberbank?

We reached honest agreement about everything in advance. There remain particular deals that fell outside the perimeter of our deal with Sberbank. These had to be done further, in order to fulfill obligations before clients, who together with us entered into these operations. Furthermore, an agreement will be in effect until September of this year whereby I cannot be hired by a commercial or investment bank-competitor. However, I would surprise myself if I started thinking in this direction.

Yet either way any major deal you think up will inevitably have to be discussed with the government?

In any country, major deals involve such conversations in some format, sometimes through consulting and informing, sometimes through agreement, sometimes by directive. Nowhere in the world does business do what it wants. A huge number of deals take place in our country. There are sectors that are 90% owned by foreigners, which raises neither questions nor political passions. People calmly work and earn perhaps not billions but hundreds of millions of dollars. I think that in the near future Russian business will see quite a lot of bankruptcies and restructurings, since you cannot forever inject money into companies verging on collapse and support the owners. Sooner or later we have to switch from the model of rescuing owners to the model of rescuing business. This fundamental change must finally occur.

We feared for so long that “capitalists” would buy everything here. In the 1990s, collateral auctions were done so assets wouldn’t go to foreigners. Great, but 20 years have already elapsed. Folks, let’s now manage well what we received! And if you can’t, a mechanism for redistributing this business should be developed.

A key problem in Russia, unlike, for example, the U.S. is the omnipresent fear of bankruptcy. Yet in fact, the bankruptcy process, when done in civilized fashion, is simply necessary in order to rescue business. Precisely thus are built the Chapter 11 procedures (Chapter 11 of the U.S. bankruptcy code permitting reorganization when applying U.S. bankruptcy laws. – Vedomosti). I repeat: we must, first of all, learn to rescue business not owners, and second, learn that bankruptcy is not the end of the story. If someone did everything correctly and fulfilled their obligations, they can try to start everything from scratch. Sooner or later it will be this way in Russia. Russia and the U.S. are very similar, yet the U.S. has fewer ideological restrictions, unlike Russia, especially regarding what’s beneficial for business. If government bailouts are needed – they’ll do it. If sales to foreigners are needed – they’ll sell. Of course, it’s a painful process there as well; they also have roaches, only fewer than we have. I’m convinced that reallocation of property in Russia is an inevitable process, since the world’s largest companies cannot remain ineffective forever.

Perhaps this will occur due to other reasons, but because of inefficiency – I don’t know.

Our best excuse is national and government interests: if I defend Russia’s interests, it is okay to be inefficient. This allows for writing off anything. Yet if you do everything incompetently and poorly, how can you protect national interests? So far we’re only trying to grasp who are the effective owners and managers. However, in the 10-15 year horizon it becomes obvious who manages well and who’s just lucky. This is the virtue of long distance. It would be good to juxtapose everything announced by the country’s 50 wealthiest people over the past 15 years with what they actually did. I think this would be deadly journalistic material for some of them, while in regard to others would show their actual business-effectiveness and success in implementing projects.

This is another element of the entrepreneurial climate. If you look at the list of the wealthiest people according to Forbes, how many are effective and how many are lucky and fortunate?

This is a big problem in our society, because money is the only assessment criterion. Yet money is made in different ways, by lobbyists, intermediaries, brokers and investors. And there are those building business. They’re different, so the evaluation criteria should be different. Changes are inevitable. There’s one question – speed, because artificially supporting the “isms” costs us dearly, no matter which “ism” it is, be it patriotism, nationalism, communism, capitalism. As soon as these “isms” start prevailing over efficiency, crash is inevitable. Precisely this poisoned the Soviet Union – due to all manner of “isms” the economy was unable to adapt to the requirements of the world situation. At a great distance, no country withstands this. The question is only the timeframes: will this happen in 15-20 years or in 3-5 years, will the changes happen smoothly and evolutionarily, or, on the contrary, abruptly.

When we interviewed a year ago, you said Russia had opportunities for economic growth, just don’t miss them. Now growth has halted. Clearly, sooner or later historical justice prevails, but where do you find the optimism to believe it will happen soon?

I am an optimist by nature. You simply cannot do business in a country while believing the situation won’t improve. Russia has to make an abrupt leap requiring enormous effort and deep structural reform. We must surpass the per capita income threshold of $15,000, something far more difficult than the initial rise from $3000 to $15,000. If we fall short – we’ll go backwards. We could long pound upon this ceiling. Argentina, for example, has tried to surmount it for over 100 years. Yet there’s another example. In the 1950s world experts included South Korea among third-world countries, lacking any chance of success. Fifty years later, the situation has drastically changed. One reason is the fantastic reforms implemented in the educational sphere, providing the country with a completely different, educated nation. South Korea is today among the top three with the best primary school systems, while Samsung has surpassed Sony not only by earnings, but also number of patents.


The stage of Troika Dialog and Sberbank is ending not only for you, but also for many of your colleagues, namely those who became partners of Troika Dialog. One wonders about the situation with the partnership’s future.

The partnership is expiring. The farewell partners’ ball will be held in Armenia in June. Undoubtedly the folks will still communicate. We’ve already confirmed a joint charitable project making it possible to enshrine the memory of Troika Dialog by supporting future talented financiers. However, in its previous form, as an operating working mechanism, the partnership expired on 1 January 2014. All formal settlements with the partners will occur by the end of January next year.

How many remain as partners today? Weren’t there certain conditions relating to job offers at Seberbank CIB?

As of 1 January, 2014, the company employed 89 people participating in the partnership. Conditions existed regarding how the person left the employer: a good or bad leaver. But this only affected how much money the person received.

And who determined if the person was a good or bad leaver?

The partners’ board. The person may have joined a competitor, yet we decided they parted well. It was decided subjectively. Everything was considered – how they left, how affairs were transferred. The partners’ board comprised 15 individuals chosen from different levels.

And decisions are made by a simple majority?

Yes, absolutely. We had 183 partners over its whole history. Of these, a dozen at most were bad leavers. And this was the majority opinion.

How many will participate in the final settlements?

Everyone will receive money, only the sums will vary.

Is an understanding or decision in place regarding the final tranche, whose amount was to depend upon 2013 results?

The question of the final tranche must be decided by the end of April, while $350m was distributed in February of this year. This was paid half a year ago. As I promised Herman Gref, and the partners’ board decided, one half-year must elapse before the partners are paid under the deal.

Where was the money physically located all this time?

At JPMorgan Chase.

An ordinary account?

Yes, the money was held under the current rate of 0.5% annually. We decided not to risk.

That doesn’t seem like an investment banker’s position: one-half percent?

This is different. In terms of responsibility before people this was correct.

Following the deal with Sberbank, do any legal entities remain with the words Troika Dialog in their titles?

The main operating companies that interact with clients and are licensed by the regulators were long ago renamed.

Yet the company Troika Dialog Investments participated in settlements under the deal with AvtoVAZ, and, if we understand correctly, it bears no relationship to Sberbank.

Settlements with it will finish by the end of this year. There’s no one else.

No other substantial companies could be named in a similar way?

(Laughs.) I don’t understand the logic. What is the journalistic interest? What are you looking for?

The boundary of the deal between Troika Dialog and Sberbank wasn’t very clear.

Everything that existed was included, except for two assets that remained with the partnership.

And, correspondingly, there was the question of the fate of the private-equity fund Russia New Growth Fund of Troika Capital Partners.

The fund is undergoing liquidation. It’s eight years old; the term of its operations expired.

And its assets?

Some are being sold, some were already sold.

Could you be more specific?

The portfolio had just eight companies, including Eurokommerz, Modis and Crazy Park. All of the companies were mid-sized businesses, hardest hit during the 2008 crisis. We had non-controlling stakes in all of these. The fund’s partners (limited partners) made the decision and chose the managing company which is doing the liquidation.

Which assets remain unsold?

For example, shares in the companies Socialist and MDM Bank. The rest were sold.

How did this whole story end for the fund’s limited partners?

It hasn’t been counted, but perhaps 10-15 cents on the dollar, which is, of course, not the results we expected. This story shows that the market sometimes proves fickle, including for me.


Were there plans to sell the KAMAZ stake before the end of 2013?

Who told you that? You have to understand that all the major, landmark deals I have ever participated in – business projects (Rosgosstrakh, AvtoVAZ, KAMAZ, Sukhoi Civil Aircraft), charitable ones (Skolkovo school, UWC Dilijan College, Tatev Revival and many others), and those aimed at creating institutions (RTS, NAUFOR, DCC) – were done based on the overall mission to change the world. KAMAZ is one of the best Russian brands, and we wanted to help reform the company, which was in poor condition. We understood that if all went well, its capitalization would increase, but I never said that the goal of my life was to build the world’s largest auto company. And this means that sooner or later we would sell our stake to a strategic investor, perhaps Russian and perhaps foreign. The entire question regards price and the terms of the deal. I will never forget the lesson I learned when, per a client’s request, I discussed purchasing “Pravda” newspaper from a Greek communist in 1995. I drank tea with him, talked international politics, Armenian-Greek relations, and then cautiously asked: “Perhaps about the sale?” I was then 27, and wore a watch at the time. He says: “You’re selling your watch?” No, I answer. He: “For a million dollars?” – “…” – “That’s exactly how I’m selling the newspaper”, he said. The entire question was the price and terms.

Do any target figures exist, for example the price you’re willing to sell for?

I really liked the price we agreed to in June 2008. Sadly, today this is barely even fathomable.

Perhaps there are target timeframes?

The key role in decision making belongs to Sergey Kogogin, who heads this project.

And he has a large share in the consortium?

Rather large. He is one of the major shareholders.

Are there other partners besides you and Kogogin?

Yes, there are, another private businessman, a quite famous person.

Is it possible to sell the KAMAZ stake in parts?

It is, but in today’s realities it hardly makes economic sense. Negotiations haven’t once stalled since 2008, yet we would like to find a workable solution for everyone. We can conclude any deal, yet we’re trying to find a reasonable balance of the interests of management, Daimler, Rostech and ourselves.

Regarding AvtoVAZ, how much will Troika Dialog Investments receive accounting for deferred payments?

I don’t recall. This is open information. The price is calculated simply. Nothing’s secret – the French disclosed all the numbers. Public companies must disclose this.

Do you plan to participate in other automotive projects?

It turned out that I, as an investment banker, participated in four major deals of Russia’s auto industry. We bought UAZ for Vadim Shevtsov, started the GAZ deal for Oleg Deripaska and did the deals with AvtoVAZ and KAMAZ. I calmly look upon any investment projects. Opportunities are many and different, including in Russia. It’s another matter that nothing happens on its own but needs enormous effort and luck. But, with the right people, even the most hopeless story continues. Herman Gref admitted he didn’t believe I could raise private money for the Skolkovo business school project. And I can say now there were times when I started thinking that AvtoVAZ was an intractable project and good results were hardly possible, even if a breakup were done. Nothing would have worked had it not been for the optimism and willpower of Sergey Chemezov.

That is, Chemezov believed, while you – not really?

His certainty that the project could be righted and involvement in the process made possible what seemed impossible.


If you look at the projects you are currently doing, how are they distributed across different countries? In which countries are you investing more?

I didn’t count, but it turns out 80/20 in favor of Russia, because I know our country best of all and understand how various processes are built here.

Perhaps you could say more about one of the foreign projects? For example, you’re participating in the interesting U.S. project Joule Unlimited. What’s the idea and why do you need it?

This is new technology for manufacturing ethanol and diesel fuel from carbon dioxide with the help of bacteria with altered DNA. Most importantly, no biomass is used – only bacteria, water and carbon dioxide. The production facility is located in New Mexico. Of course, there are many other unsolved tasks, but this example shows how far biotechnologies have advanced. I have several other similar projects, for example Pronutria in the food industry. This company manufactures food additives on the basis of modified proteins, which help successfully battle many ailments.

You mentioned the company Pronutria. Could you expound on this?

It’s also a kind of revolutionary project, seeking to solve the problem of healthy eating with the help of biotechnologies. After all, it’s no secret problems exist with people’s nutrition and rising food prices, not only in third-world countries. While in Washington, I was told that about 40% of Americans eat lunch for only $1.50. They eat so-called junk food because for $1.50 they cannot afford quality food. The person won’t die from hunger, yet is eating something impossible! Around 30% of children in the U.S. (scary numbers!) go to school without eating breakfast. Because of this, they barely engage with and learn the material. And this is the world’s wealthiest country, whose economy allows for avoiding such problems.

Pronutria is a U.S. company?

Yes. It has already started manufacturing products. Eventually it will likely be acquired by the major manufacturers. Joule Unlimited faces the same dilemma: either sell the technology or build a company that can independently produce everything, although building a company may require completely different qualifications and much more time.

By all appearances, the main driving force of the Joule Unlimited project is its founder Noubar Afeyan. And Pronutria?

At Pronutria as well. He’s an amazing person, one of the few venture capitalists of whose 70 companies 46 are built on his own inventions. Hence he is not the typical venture investor who simply succeeded in raising money. He holds a PhD in biochemical engineering, lectures on innovations, leadership and entrepreneurship in the sphere of new technologies at Massachusetts Institute of Technology. Founder of Flagship Ventures, he’s a unique person from the standpoint of the world-changing ideas he generates.

Can you disclose your shares in these companies?

As I already said, I decided for myself not to hold a controlling stake anywhere. I can be a major shareholder: in some situations 30%, others 5-10%. I have no desire to be operationally responsible for business. The shares vary: from small, as with Bigfoot, to quite substantial, as with Joule Unlimited. Sometimes I serve on the board of directors, participate as a consultant, or help attract investments.

And how does Lamoda fit into this philosophy?

I was interested to see what these Germans are doing (the brothers Alexander, Marc and Oliver Samwer, founders of startup incubator Rocket Internet. – Vedomosti). They aren’t unique in their ideas, but are trying maximally to use the advantage of German follow-through and discipline and to disseminate throughout the world a creative idea already proposed by someone else. Other countries are doing the same, including South Korea and China. Yet this is another breakthrough project, only the ideas from the implementation standpoint already exist. For example, they’re the first player to try to concurrently do e-commerce in Singapore, Thailand and the Philippines, since e-commerce markets in Asia, it turned out, are segmented and isolated.

How do you find such projects in general? Who pitches them to you?

People. We’re returning to where we began: I have an enormous competitive advantage – broad connections. Some people I met because of my activities, which are highly multi-faceted, through economic forums, for example the World Economic Forum, or through implementation of joint social projects. Everything I do centers on knowledge and understanding people. I consider people the greatest asset. It’s very important who I’m with. For example, I recently declined participation in a solid investment project: an excellent product – an organic drink, just 60 calories, no sugar. It can already be sold in the U.S. It could potentially compete with Coca-Cola. It’s a fantastic project, yet I didn’t experience a feeling of trust in the people making it; such projects are uncomfortable for me. I realize I can be wrong. Perhaps the project will flourish and I will have missed a profitable investment.

According to which principles do you choose projects?

As you may recall, the mission of Troika Dialog was: “We create the future today to surpass dreams tomorrow”. For me this hasn’t changed. There are several criteria I consider fundamentally important. The first is that any project I’m going to engage in must have a serious impact on changing the economic or social space. The second is having the right people in it, so there is trust between us. The third is that all projects must have a lasting impact, meaning there shouldn’t be one operation, for example purchase-sale. Projects must yield serious qualitative changes having an impact for a long time. I like to make the impossible possible, through different mechanisms – through an investment bank, by creating an exchange, through a business school, through projects like Joule Unlimited or Sukhoi Civil Aircraft. I like to actively participate in such projects that are unobvious from today’s standpoint, yet actively impact the future and require transcending ordinary boundaries. Today very few recall, but we did the Novatek IPO in 2004 immediately following Khodorkovsky’s first trial. Moreover, our goal was to help Leonid Michelson in creating an independent player on Russia’s gas market. We considered it important for the country’s future. And I’m very proud that, thanks to the Michelson’s talent and organizing abilities, for all its challenges this project proved successful. Hopefully we are to be partially credited as well. All of my projects turn out long-term. All of my life I regarded myself as a good sprinter, yet proved to be a true, thorough stayer, in terms of psychology and the desire to build relationships and partnerships. For example, six years ago in Armenia we financed the purchase of a bank then ranked 21 of a possible 22. Furthermore, the major foreign banks had then been operating in the country for several years, while several local banks had special relationships with government agencies. Nevertheless, a unique team of managers headed by Andrey Mkrtchyan achieved the impossible: the bank is currently № 1 in the country, having gained international recognition in spite of Armenia’s small economy and high competition in the financial sector. As it turns out, a normal bank can be built in this environment. I like these kinds of examples.


You have many international investor acquaintances with whom you speak continuously. And you invest in different countries, so you can view the situation in Russia through foreign investors’ eyes. What do you see?

I see a strong leader. Yes, of course, investors have concerns, yet they would much rather see a stable and strong government than total lack of rules of play. Furthermore, everyone understands that any restrictions are an opportunity to earn more and receive a higher margin, since the competitive space narrows. During the scariest years of the Cold War, Finland earned quite decent money on the fact that it worked as middleman between the Soviet Union and the developed countries.

Crimea will require investments. Which international investors can be relied upon?

I serve on the Economic Advisory Board at the IFC. One part of their mandate is investing in regions where no one else does, for example countries in conflict. It was very interesting for me to see the statistics: they have quite decent results, there are successful projects with high ROE. It turned out that investing during conflicts is possible and you can even make good money. Clearly substantial systemic risks exist, but overall it’s possible to invest during conflicts.

Hence the worse, the better?

Abraham Lincoln once said that all vast fortunes are made either when the country is created or when it falls apart. Moreover, when the country is falling apart, greater earnings are possible.

Yet regarding the investors’ profile: they aren’t all the same people? For example, major pension funds will unlikely want to invest in a conflict territory.

They simply can’t – there are mandate restrictions which prevent certain investor categories from working in such situations.

Your forecast: how might the situation in Crimea be solved?

I recently explained to foreign colleagues that three problems exist. The first is short-term – Crimea’s status. The second is medium-term – how to stabilize the situation in Ukraine and ensure that legitimate power emerges in the country, which is able to disarm all those who illegally acquired weapons. This problem is hardly solved over several weeks. Its solution could take a half-year, year, or two years. Too many people have received the opportunity to participate in the separation, profiting on instability and skirmishes. The third, long-term problem is Ukraine’s economy. The country should be economically prosperous. It should gradually repay its debts, currently totaling about $38bn. This is a very challenging legacy, and a light injection won’t help – serious reforms are needed. So I would say the situation in Ukraine is more difficult than in Crimea. In Crimea it’s clear who’s playing, who gives money and how the situation can be stabilized. As for Ukraine’s future, this requires more complex solutions. Collaborative work is needed between Russia, the EU and the U.S. No side can rectify the situation unilaterally. It’s necessary to sit down for negotiations.

Is collaborative work between these countries possible after what has happened?

Easily. In Churchill’s memoirs on the Second World War, the final tome discusses how Europe was split following the war, how the victorious countries cynically deceived territories and nations; this was certainly a card game. As all the crises of recent decades have shown, investors have short memory. Money has to work, and it will work. Capitalism, unfortunately, isn’t the best system, but it has its rules.

How willing are U.S. investors to obey if politicians recommend they reduce investments in Russia?

I’m not very familiar with U.S. investors’ relations with the government, but, for example, according to data from the weekly magazine Corporate Crime Reporter, the U.S. Treasury enacted sanctions against more than 100 multinational firms, including U.S.-based, having economic ties with so-called “rogue countries” – Cuba, Iran, Iraq, Afghanistan, North Korea and more, through cunning schemes, third countries, or imposter companies. So it is with Russia: those wishing to invest will find the opportunities. Once again, any restrictions lead to higher margins: costs of doing business are higher – hence, the margin should be higher. We’re entering a paradigm where the risks of doing business increase, capital costs are rising, and the cost of entry is greater.


Why is The Russia Forum 2014 investment forum postponed until autumn?

This was decided by Sberbank’s management, believing there would be more clarity in the fall and discussing investment will be important and necessary. Furthermore, the situation now amplifies the existing rancor and misunderstanding. It’s better to begin from a clear picture.

Are Western investors as interested in the forum as before?

Definitely. The less you know, the lower your chances of success. Information is an enormous asset, and the more you have, the greater your advantage.

You said you discussed the situation with partners. What concerns them in this situation?

They are concerned by the situation in Eastern Ukraine. They’re interested whether Russia’s expansion will continue and where’s the boundary. They’re trying to understand sentiment inside Russia. They believe the propaganda is mistaken. They think Russia lacks unanimous support for the government’s actions, which is wrong. The outside world must acknowledge that the dominant majority of both ordinary citizens and elite in Russia indeed support the government’s actions. It’s no coincidence that, following the events in Ukraine, Barack Obama’s rating in the U.S. fell, while Vladimir Putin’s, on the contrary, rose not only in Russia, but also worldwide. When a neighbor has a strong leader, concerns arise as to further actions, especially if your country’s leader isn’t very strong. Today, Putin is clearly acknowledged among the world’s strongest politicians both by our friends and opponents.

Do you still plan to engage in preparing the recently rescheduled forum?

I’ll be glad to help, yet this is no longer my decision. Nevertheless, I will create venues and mechanisms so that people, despite all the boundaries, continue communicating. I would like to organize 4-5 conferences every year on various issues, such as education, philanthropy, asset management, BRICS and other interesting topics. My main task is to surmount the overall level of wariness in society and thereby help people better understand one another. And organizing conferences is one of the mechanisms which allow for achieving this.


Born in 1968 in Yerevan. Graduated from the faculty of economics at Lomonosov Moscow State University

1992 - Executive director, then president at Troika Dialog

2002 - CEO at Rosgosstrakh

2005 - Chairman of the board of directors of Troika Dialog

2006 - President of Skolkovo business school

2012 - Following the merger of Troika Dialog and Sberbank – co-head of Sberbank CIB

2013 - Advisor to the chairman of the board and CEO of Sberbank of Russia

What Vardanyan found of interest in the U.S.

Joule Unlimited was founded in 2007 by a group of scientists and entrepreneurs led by Noubar Afeyan (pictured) – entrepreneur, investor and teacher at Massachusetts Institute of Technology, as part of the venture laboratory of Flagship Ventures. Afeyan set up Flagship Ventures back in 2000. Since then it has attracted over $900m; its portfolio currently includes shares in more than 40 companies. The ideas for many of these emerged in the laboratory of Flagship Ventures. The basic idea of Joule Unlimited is technology for creating a cell capable of transforming carbon dioxide and light into different materials (the process of creating diesel fuel – pictured). This technology interested Rusnano, which in 2011 became the company’s co-investor. The overall project budget to develop the technology is estimated by Rusnano at R17.92bn, of which Rusnano’s share totals R1.1bn. Rusnano believes this technology outstrips all existing alternative fossil fuels by productivity.

Vardanyan at SKOLKOVO

“We’re trying to establish an effective corporate structure. New and bright people are coming to the school. Of great importance for us was the arrival to the post of dean of Andrei Sharonov. The recently-created Wealth Transformation Centre (WTC) was headed by Veronica Misyutina, former partner at PwC in Russia, while heading the Institute for Emerging Market Studies (IEMS) at SKOLKOVO is Karl Johansson, the former CIS Sub-Area Managing Partner at Ernst & Young. The MBA program is relaunching; certified program formats are developing: MBA and EMBA. The school has its own innovations: the “Practicum” program for small and medium-sized business, Startup Academy, short-term open programs. As before, a major proportion is the programs commissioned by major corporations. The Board members do quite a lot of work. Each one of us engages in the Skolkovo project quite actively. I, for example, head the committee for international activities, brand and fundraising, and am vice-chairman of the school’s international advisory board, as well as heading the IEMS advisory board and running the WTC. Of course, at the scale of Russia’s 143m residents, the successes of Skolkovo business school may not be readily obvious, but we have examples of alumni achieving success in different spheres. The school faces some challenges, but overall I think it’s a very successful project. Everything is gradually coalescing; all is going well. I have said many times and will repeat that 20 years must elapse, the school should have several thousand alumni – then it will be clear whether the project is successful. After all, we never vowed to build another Harvard, not to mention in such brief time”.

Grigory Milov

Boris Safronov