Carlyle abandons Russian fund

The Carlyle Group has withdrawn an effort to break the Russian market for the second time in five years.
 
The firm has terminated its attempt to raise a $300 million (€238 million) fund focused on Russia without reaching a first close. The fund failed to attract

For western investors, Russia’s risk profile currently lacks the predictability to give us confidence in returns. Potential Carlyle investor

sufficient investor support, according to a source close to the situation.
 
Three of the four professionals whom the firm had on the ground in the country have already left the organisation. The fourth, co-head of the Russian investment team Joshua Larson, will close the Moscow office as part of a gradual winding down process.
 
An investor who had originally expressed interest in the fund told the Financial Times: “For western investors, Russia’s risk profile currently lacks the predictability to give us confidence in returns. The investment market is very volatile at the moment.”
 
This is the second time Carlyle has had to reconsider its strategy in the region. It closed its first Moscow office in 2000 after only two years of operation. The firm has previously made investments in Russia, such as its 1999 acquisition of pharmaceutical business Apteka and says it will still consider making investments in the country from its European and US funds.

Russia is considered a high-risk destination for investments in part because of government interventions in business such as the high profile Yukos case. Mikhail Khodorkovsky, the oil giant’s former chief executive who is currently detained by the Russian government, once sat on Carlyle’s energy advisory board.
 
In March Carlyle closed its latest buyout fund, the $7.85 billion US-focused Carlyle Partners IV fund.