Russian investor targets pensions, housing

By Robin Paxton

MOSCOW (Reuters) - Sputnik Group President Boris Jordan aims to become one of Russia's top five pension providers by launching a business in an area where investment has lagged demand, he told the Reuters Russia Investment Summit on Monday.

Insurance and housing will also be major areas of growth in Russia with the emergence of a more affluent society, said Jordan, who has been one of the leading investors in Russia over the last 15 years and advised on post-Soviet privatizations.

"We're not rocket scientists. We try to take things proven in the West, the simple things, and apply them here," he said at the Summit, conducted at Reuters' Moscow offices.

Jordan, a U.S. citizen, made his first Russian investment 14 years ago in mobile phones. Sputnik Group, a private equity and advisory firm of 15 people, now manages nearly $2 billion of its own money in Russia and abroad.

Sputnik planned to launch a pension business in the new year in which the European Bank for Reconstruction and Development could take part, Jordan said, adding the board would meet this month to decide on whether to launch the business by January 1.

"Our largest investments now in Russia are in development of the whole financial services sector tied to insurance, asset management and pensions," he said.

"Life insurance today is a very small component of the overall insurance business in Russia," he said, adding it accounted for 56 percent of the insurance business worldwide but only 5 percent in Russia.

HOUSING BOOM

Rates would be adjusted to demographics in Russia, where average male life expectancy is only 59. But over the long term, Jordan said he expected the population to live longer.

"As every society in the world has grown and its prosperity and GDP grows, so does life expectancy," he said.

Jordan identified infrastructure, housing in particular, as one of the next boom areas in Russia as the population's disposable income increases.

He also said housing was an area in which the state could usefully invest in partnership with private money, possibly by creating a large infrastructure fund.

"Russia has more land than it needs, yet people still live on top of each other," he said.

"Despite that fact GDP and reserves have grown so successfully, the average Russian still lives in substandard housing, not because there isn't the available credit or because they can't afford housing. There just aren't enough projects."

And with houses come mortgages.  Continued...