To mark PEI’s 21st anniversary, our editors past and present recalled their most memorable headlines.

I started working at Private Equity International as a staff writer in September 2014. One of my first tasks was to proofread that year’s Operational Excellence special edition. One of the award winners was TPG, for its investment in Russian hypermarket chain Lenta. Having studied Russian at university and spent a year living in Moscow, I was excited to read about what was described in the write-up as a “textbook” deal that created somewhere in the order of 14,000 jobs.

Little did I know then just how rare it was for a big-name Western private equity firm to invest in Russia. In fact, I haven’t seen another deal like it since.

Fast forward five years, and my colleague Toby Mitchenall had the opportunity to interview Bill Browder, once the most prolific international investor in Russia through his firm Hermitage Capital Management.

It was just a few weeks after Michael Calvey, founder of one of Russia’s most prominent private equity firms, Baring Vostok Capital Partners, and three colleagues had been arrested over a dispute concerning portfolio company Vostochny Bank. Calvey has since been found guilty of embezzlement and received a five-and-a-half-year suspended sentence.

Hit list

This was an interview like no other I had worked on during my time as editor. At the time, Browder was Russian president Vladimir Putin’s most wanted political enemy.

He told us he didn’t live in fear, but certainly “in danger”, and he talked of reducing risk to make it “more difficult for them to kill me”. I urge you to dig out the article for the details.

Russia, he told us, is “an uninvestable place”, where if you want to survive as an investor, you “basically have to become a criminal” in the West. Otherwise, he said, they’ll make up fake crimes about you. “You don’t just risk losing your money, you risk going to jail or dying, and I don’t think anyone would want to take that risk,” he said.

But it was not just what Browder said about Russia that made this interview so fascinating. Here was an investor who had made all his money investing in public equities in emerging markets, but now had all his capital invested in private equities in developed markets. Why?

For starters, he said, when you’re assessing an opportunity, forget about investment returns, valuations and all those other indicators predicting future growth, and ask yourself this: is the legal infrastructure in place to make an investment possible?

Rule of law

“Having been a full-on witness to what goes wrong in these places,” Browder said, “I’ve learned that the rule of law, property rights, [and] independent courts are not a useful addition, they are an absolute essential part of any investment case.”

You have to be able to assume, he went on, that when you make money, it’s yours to keep. Certainly in Russia, but also in many other emerging markets, Browder said that is not necessarily the case.

Most interviewees we sit down with, understandably, want to focus on successes and opportunities. Here was an undiluted voice telling the other side of the story.

Isobel Markham is a freelance editor and journalist. She was senior editor, private equity, Americas at PEI Group until 2021.