Vladimir Tatarchuk on the special situations market, peculiarities of investing in troubled assets and business succession
Moscow saw an opening of the XIII Russian Private Equity Congress and IX Venture Capital Investors Forum
Vladimir Tatarchuk, Chairman of Board of Directors and partner of PCG spoke at XIII Russian Private Equity Congress and IX Venture Capital Investors Forum, the leading event devoted to private equity and venture capital industry in Russia and CIS countries.
Managing partner of UFG Private Equity, Arthur Akopyan, managing partner of Zubr Capital Management, Sergey Ryabukhin, managing partner of Phystech Ventures, Petr Lukyanov, and Senior Vice President of Russian Direct Investment Fund (RDIF), Mikhail Kireev, also took part in the panel discussion "Private equity and venture capital industry in Russia and the CIS". Managing partner of Almaz Capital Partners, Alexander Galitsky, moderated the discussion.
Vladimir Tatarchuk spoke about the special situations market in Russia and the specifics of investing in troubled assets. "When we talk about special situations we mean investments in a company with a set of discounting factors, factors that make it possible to buy an asset cheaper than its potential market value," he explained. The first discounting factor is the capital structure. For example, many companies get carried away with financing long-term projects with short-term loans, fall into the trap and have to rush to find a buyer. And when owners are in a hurry, they are offered a lower price.
The second group of discounting factors is related to human nature, when shareholders change their life plans: some want out of the business, some, on the contrary, want to be active, conflict arises. The same group of factors makes up family business succession.
"Resolving relations between shareholders, between partners, is an important prerequisite for an investment to be successful. In addition, there is a generational shift in the market. Many people who set up businesses in the 1990s are retiring and handing over the reins to their children and their heirs. Children often don't want to run a business. There are many cases when the heirs irrationally argue with each other, and this leads to dilution of the company's value and it is also a discounting factor," said Vladimir Tatarchuk.