Carlyle launches Russia initiative

The private equity bear awakens and appoints the former Morgan Stanley Russia head and the co-founder of Baring Vostok to co-lead its new Moscow-based Russia investment team.

Washington, D.C.-based private equity giant The Carlyle Group has appointed Joshua Larson and Andrei Terekhov as managing directors and co-heads in the firm’s new Moscow-based office.


Carlyle’s two new Russian co-heads are no strangers to the Russian investment market. Larson formerly served as the head of Morgan Stanley’s Russian investment banking operations in Moscow, leading the development of relationships with a number of major Russian corporations in the oil and gas, natural resources and consumer sectors. Before Morgan Stanley, Larson worked at Goldman Sachs, where he was jointly responsible for the development of its Russian business.


Terekhov formerly served as a senior partner and co-founder of Baring Vostok Capital Partners, one of Russia’s leading private equity firms. Prior to Baring Vostok, Terekhov worked as a project manager with the consulting firm Central Europe Trust.  


The announcement comes four months after the firm shelved preliminary talks to launch a Russian buyout fund with Russian industrial giant Alfa Group. That decision came in light of then-recent incarcerations of two prominent Russian business moguls – Mikhail Khodorkovsky and Platon Lebedev – who also served as Carlyle advisers.


The announcement also comes less than one week before Russia’s presidential elections. Although many in the investment community are usually cautious around Russian election time, a recent spat of appointments by President Vladimir Putin to streamline the Kremlin government has reassured financial analysts about the country’s economic performance, according to news reports.


A Carlyle spokesperson said the firm decided to set up shop in Moscow independent of a third party after initially exploring the idea back in the fall. Larson and Terekhov will assemble a team of primarily Russian nationals to spearhead buyout activity for Carlyle.


Although no official plans for a dedicated Russia buyout fund have been revealed, a source close to the firm said Carlyle is expected to launch fundraising for a Russian private equity vehicle in the near future. In the meantime, the Moscow team will focus on establishing itself in the region and looking for deals in the industrial, consumer, energy and natural resources sectors. Should the firm locate potential purchase opportunities, the investments will be funded on a deal-to-deal basis, according to the Carlyle spokesperson.


Carlyle currently has one majority stake in Russia, Apteka-Holding. The company is Russia’s fourth largest pharmaceutical distributor, with 2003 revenues totaling more than $19 million, according to Apteka’s Web site.