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Tuesday, 13 July 2010 09:02

Metropol Founder Invests Karate-Style

By Maria Antonova

MOSCOW, July 13, 2010 (TMT) - A geographer turned investment banker, Mikhail Slipenchuk has combined his passion for karate and travel with an entrepreneurial streak to turn his Metropol firm into a leading investment company after starting off with a modest $300,000 in the early 1990s.

 

The company almost went bust in the 1998 crisis, but survived, and is now active in projects from Japan to Africa, in addition to boasting eclectic extracurriculars like Lake Baikal diving and organizing balloon trips over the Arctic.

 

Slipenchuk sold his 50 percent share in Metropol-controlled Obibank earlier this year to Japanese SBI Holdings in a deal that would provide state-of-the-art Internet technology to the bank, enhancing its personal banking arm.

 

The deal was one of the first foreign bank acquisitions since the start of the financial crisis, and produced the first bank jointly controlled by a Russian and a Japanese company in a 50-50 ownership structure.

 

"The Internet is developed more seriously in Japan than in Russia, but seeing the geometric progression of Russian IT market growth, I think we'll catch up in five years," Slipenchuk said.

 

It was Slipenchuk's interest in karate that opened the door to Japan for him: He was introduced to Japanese business circles through his martial arts instructor in the early 2000s. He has since established an office in Tokyo.

 

Slipenchuk said SBI Holdings has a more aggressive strategy than the average Japanese investor, whom he described using a Japanese saying: "He tests each stone of the bridge he is crossing before stepping on it."

 

This cautious approach is the reason why Japan already lags far behind China in the race to enter Russia's resource market, he said.

 

Hoping to change that, Slipenchuk recently invited Japanese companies to Buryatia, where Metropol is looking for partners to expand its mining capacities since Sweden's Lundin Mining pulled out of the Ozernoye deposit project last fall.

 

Metropol is in talks with companies from Russia, Japan, China, and Hong Kong, Slipenchuk said.

 

"European companies are financially weakened," he said, adding that Metropol is also ready to develop the Ozernoye deposit on its own "step by step."

 

By 2013, Ozernoye, which is controlled by East Siberia Mining Company, a Metropol subsidiary, is expected to reach the capacity of six million tons of various ores, mainly lead and zinc, but it will take $1 billion to fully develop the deposit, Slipenchuk said.

 

Slipenchuk sees much more potential in another ore deposit which has been in judicial limbo after it fell inside the environmentally protected zone around Lake Baikal, outlined by the government in 2006.

 

Metropol acquired the license for the Kholodninskoye deposit, which sits about 30 kilometers from the lake and is three times bigger than Ozernoye, in 2005, but now industrial activity is prohibited in this area.

 

"On one hand, we have to obey the law and develop it to meet licensing obligations, but on the other, we cannot do any development," Slipenchuk said.

Slipenchuk has been lobbying the government for years to permit mining at Ozernoye.

 

"I am sure that the government is interested in this development and will make the one right decision sooner or later," he said.

 

Restarting the mine, which was only active for a while in the 1960s, will cost $100 million.

 

"If the government is ready to spend $100 million on this, we can do it for the government, but I don't think it would be the right decision," Slipenchuk said.

 

Like some other Russian investment banks, Metropol has also been pursuing resource-related projects in Africa, focusing primarily on Congo.

 

"In Africa, we are like the Japanese in Russia, with the difference in that we have experience of working in Russia in the 1990s," Slipenchuk said.

 

Congo is considered the most dangerous country in the region, but Metropol hopes it will give it a head start.

 

"Comparing it to Russia, Angola is 1997 and Congo is still 1991, maybe even 1989," Slipenchuk said.

 

"We have been there for four years. We are not touching politics, but keep good relations with everyone," he said, adding that Metropol has established a bank in Congo and is interested in developing mining and hydropower projects there, but has not yet acquired any licenses.

 

Speaking on the economic situation back home, Slipenchuk said he still harbors doubts about the alleged recovery, adding that he saw "no growth or decline in the economy."

"There cannot be an economic crisis in Russia because there is no economy," he said. "Everything is built on oil and gas."

 

Slipenchuk predicted volatility of up to 15 percent on the Russian stock market until the end of the year due to financial speculation.

 

"There is a lot of money on the market since it never went to the real economy," he said.

 

Slipenchuk said he welcomes President Dmitry Medvedev's innovation and modernization campaign, but noted that it faces a mammoth obstacle in the country's "archaic certification system."

 

Metropol, which set up its own venture fund six years ago, has selected four scientific projects that it deemed to have good market potential, but none can currently proceed because of the ongoing Kafka-esque certification process.

 

One of the projects is a "growth vitamin" for plants, which the company has been giving out to employees and their friends for use at their dacha gardens.

 

"We'll harvest in the fall and find out what the results are. So far, my [plants] are flourishing," Slipenchuk said.

 

But the project is stuck since the vitamin cannot be certified as either fertilizer or pesticide, which are the only available categories.

 

"This is exactly why Russia fell behind in science," Slipenchuk said. "A scientist could invent the perpetual motion engine right now, bring it forward, and we would not be able to use it."

 

 

 
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