The fund invested 1.6% in Mail.ru last month and fund managers Hugo Bain and Peter Jarvis are considering further investments in the sector.
“Mail.ru owns a stake in Facebook and Groupon. It is actually one of the only ways to gain exposure to Facebook – though that is not the reason we are investing in the company,” says Bain. Mail.ru runs Russia’s largest email, instant messaging and social networking services and enjoyed a successful IPO on the London Stock Exchange last November.
The duo acknowledge that the state of the Russian IPO market in general is less favourable, however, after all of last year’s IPOs were either scrapped or have subsequently seen shares drop below the initial offer price.
"Liquidity is an issue going forward. It is having an impact for companies coming to the market," said Bain.
Nonetheless, he believes Russia is seeing “a marked improvement in the quality of management and business transparency”. “We don’t think there’s excessive political interference in any sector”, added Jarvis.
The pair have pared their underweight to the energy sector since December 2010 but moved underweight utilities in February 2010 after the announcement of caps on Russian electricity prices.
They remain overweight the materials sector and say that Russian steel producers are among the lowest cost steel producers across the globe.
