Private Equity: Ownership in non-public companies
Private Equity offers the highest return potential among alternatives but demands patience, expertise, and tolerance for illiquidity
Global Trends (Private Equity)
Growth (2020-2024):
Sanctions Impact:
Pre-2022 Strength: Tech/innovation hub (skilled labor, universities) attracting VC/PE.
Post-2022 Reality:
Key Russian/St. Petersburg Nuances:
Private Equity Pros:
Private Equity offers the highest return potential among alternatives but demands patience, expertise, and tolerance for illiquidity. In Russia, it operates in a sanctions-induced vacuum, reliant on state capital and domestic buyers. Exits are virtually impossible, turning Private Equity into a multi-decade "forced hold." For Saint Petersburg, the loss of its innovation ecosystem relegates Private Equity to defensive sectors (industrials), with returns capped by political risk.
Compared to alternatives:
Growth (2020-2024):
- 2021 Peak: Record fundraising ($1.2tn) and deal value ($1.1tn), fueled by low rates and tech/growth investments.
- 2023 Slowdown: Deal volume ↓15% YoY; exits stalled due to valuation gaps and high rates.
- Sector Shifts: Tech dominance continues (AI, SaaS); rising interest in energy transition and healthcare.
- Key Risks: Portfolio markdowns, prolonged holding periods, refinancing risk (debt maturity walls).
Sanctions Impact:
- Foreign Private Equity exit frozen (no IPO/M&A routes).
- Domestic funds now dominate, targeting "friendly" investors (Asia, Gulf).
- Focus on import substitution (agritech, pharma, logistics) and defense-linked industrials.
- Deal values ↓70%+ since 2021; minority stakes and debt restructuring prevail.
- Challenges are Currency controls, legal ambiguity, and zero international capital.
Pre-2022 Strength: Tech/innovation hub (skilled labor, universities) attracting VC/PE.
Post-2022 Reality:
- Brain drain (tech talent exodus); defense/industrial focus replaces tech.
- Deals driven by state-backed entities supporting strategic sectors.
- Outlook: Survival hinges on government capital; innovation ecosystem severely damaged.
Attribute | Private Equity | vs. Real Estate | vs. Infrastructure | vs. Commodities |
Return Potential | High (20%+ IRR target) | Lower (core: 6-9% IRR) | Moderate (8-12% IRR) | Speculative (no yield) |
Liquidity | Very Low (10+ yr lockups) | Illiquid (direct assets) | Very Low (30-yr assets) | High (futures) |
Control/Influence | High (board seats, ops control) | Limited (passive leases) | Moderate (concessions) | None |
Income | None (back-ended returns) | Stable yield (rents) | Stable yield (PPAs/tolls) | None |
Risk Drivers | Execution, leverage, exit timing | Tenant, interest rate, location | Regulation, political | Geopolitical, macro |
Operational Burden | High (active portfolio management) | Moderate (asset management) | Low (long-term contracts) | Low (futures) |
Inflation Hedge | Weak (exit multiples compress) | Strong (rent escalations) | Strong (CPI-linked) | Strong (hard assets) |
Key Russian/St. Petersburg Nuances:
Private Equity Pros:
- Access to strategic assets (e.g., critical tech/industries) at distressed valuations.
- State co-investment reduces capital risk.
- Zero exit options: Sanctions block sales to global buyers; domestic buyers lack capital.
- Geopolitical overhang: Assets at risk of nationalization or secondary sanctions.
- Currency risk: RUB volatility distorts valuations.
- St. Petersburg: Tech talent drain cripples growth-stage opportunities;
Private Equity offers the highest return potential among alternatives but demands patience, expertise, and tolerance for illiquidity. In Russia, it operates in a sanctions-induced vacuum, reliant on state capital and domestic buyers. Exits are virtually impossible, turning Private Equity into a multi-decade "forced hold." For Saint Petersburg, the loss of its innovation ecosystem relegates Private Equity to defensive sectors (industrials), with returns capped by political risk.
Compared to alternatives:
- PE’s operational control contrasts with real estate’s passivity.
- Its lack of income differs from infrastructure’s stable yields.
- In Russia, Private Equity’s illiquidity and political risk exceed even real estate’s challenges.
- Only suited for: Specialized investors with local networks, multi-decade horizons, and appetite for quasi-political ventures.
the environment is challengig for Private Equity but a deal is a deal, are you looking for capital or you would like to enter in the capital of stable or growing companies in Russia?
Contact Us, let's discuss your project!
Contact Us, let's discuss your project!
Contacts
Tel: +79052255567
email: info@dma-invest.com
Address: St. Petersburg, 191123, Zakharyevskaya st., 25 letter A, premises. 21-n, office 508
email: info@dma-invest.com
Address: St. Petersburg, 191123, Zakharyevskaya st., 25 letter A, premises. 21-n, office 508
About the company
Services
Contacts
OOO "DMA INVEST"
St. Petersburg, 191123, Zakharyevskaya st., 25 letter A, premises. 21-n, office 508
Russian Federation
Tel: +79052255567
email: info@dma-invest.com
St. Petersburg, 191123, Zakharyevskaya st., 25 letter A, premises. 21-n, office 508
Russian Federation
Tel: +79052255567
email: info@dma-invest.com