The Luxembourg-Moscow connection
The wealth of the largest country in Europe and its numerous natural resources are just two of many strong arguments for strengthening relations between Luxembourg and Russia. Furthermore, an initiative of the Russian Government to turn Moscow into a financial centre will strengthen its role as an international finance hub. However, the ties between Luxembourg and Russia go beyond the mere economic sphere: some 3,000 Russians live and work in Luxembourg and a number of associations promote Russian culture and business. The Luxembourg practice of international legal firm Allen & Overy has understood the signs of the times and recently launched a Moscow desk. Almost 40 years of experience advising on transactions with the former Soviet Union make them an experienced specialist in this field. LFF talked to Marc Feider, partner at Allen & Overy Luxembourg, about the opportunities created by a Luxembourg-Moscow connection.
LFF: What were the reasons for opening a desk in Moscow?
MF: We believe that bringing Luxembourg expertise on-site directly into Moscow's board and conference rooms adds value and gives comfort to our existing and prospective clients. A local presence in Moscow allows us to create a bridge between two important business and financial communities. It demonstrates commitment on our part but it also gives us the opportunity to listen to the needs of the Russian business community and it allows us to match Russian needs with Luxembourg products andservices, and vice-versa, in the most efficient manner. Furthermore, it gives us a competitive edge in terms of opportunity spotting.
LFF: How would you describe the relations between Russia and Luxembourg?
MF: The economic relations between Russia and Luxembourg have developed rapidly in recent years with Luxembourg ranking as the number one foreign investor in Russia. Some Luxembourg companies and funds now rank in a prominent position as foreign investors in Russia and a number of Luxembourg banks are appealing to Russian private banking clients. More importantly, many major Russian companies have a presence in Luxembourg, being active in various sectors such as finance, oil and gas, steel, energy, information technology, life sciences, and import/export. They use Luxembourg as a hub for their international activities and investments, particularly within the European Union .
LFF: Is this your first country-specific desk?
MF: The Luxembourg Russia Desk is the second international desk of Allen & Overy Luxembourg. We launched our U.S. Luxembourg Desk in 2009 and are currently planning Luxembourg specific desks in other strategic locations around the world. This comes of course in addition to our global office network in 36 locations worldwide which support Luxembourg and its products on an 'as needed' basis.
LFF: What makes Luxembourg attractive as an investment opportunity for Russians?
MF: Luxembourg, as a socially, economically and politically stable country, is a safe haven for all investors including for Russians. Its investor friendliness alongside its flexible tax and corporate legislation give comfort in terms of predictability, making it easy for Russian investors to use Luxembourg as an investment platform and as a gateway to Europe and beyond. It also constitutes an excellent platform for Russians to pool investments together with other non Russian investors, using one of the different attractive Luxembourg investment vehicles, and then to invest in the Russian market.
LFF: What makes Russia attractive as an investment opportunity for Luxembourgers?
MF: To name a few: the wealth of Russia and its natural resources, in particular oil and gas; a market with the consumer potential of 130 million inhabitants not including the inhabitants of the former CIS states; also the ambition of the Russians to position Moscow as a leading financial centre and its ambitions in terms of nanotechnology.
LFF: Are these clients mainly companies or individuals?
MF: We advise both, individuals (usually HNWI and UHNWI) and companies. This is particularly important with respect to a jurisdiction where, maybe more than in most other countries, big businesses are owned by individuals and where the personal influence and touch of the individual owners as regards their big businesses is clearly perceptible.
LFF: Are there special challenges when dealing with Russian clients?
MF: The personal contact and building of personal trust is of paramount importance when dealing with Russian clients. Most often, business is only done after extensive two way due diligence has been carried out and the requisite comfort level has been created. Big organisations are fairly hierarchical. Decisions are taken at various levels and even decisions of apparently secondary importance are not untypically ultimately taken at the very top. EK