Russia was among the outsiders on the value of the business

Russia with the figure of 29.26 was on the 27th place out of 30, beating only Nigeria (26,71), Egypt (of 25.62) and Argentina (of 13.02). Above Russia in the list are in addition to China, the two countries of BRICS: India (13, figure 52,64) and Brazil (26-th place, the rate 31,21).

Than closer the value of the “doing business index” to 100, the closer the performance of the country to the best world practices. As a result, the first line in the “doing business Index” was the USA with an indicator of 80,66. Followed by UK (72,4) and Canada (66,8). In the first ten of the list were the Netherlands (65,54), UAE (63,88), Australia (61,32), Germany (58,85), Malaysia (58,15), China (57,05) and Japan (56,8).

Indicators of Russia in the “doing business Index” means that the Russian entrepreneur when selling your business get the amount in 2-4 times less than his colleagues in most economically developed countries of the world. Including because in the evaluation of companies in the market takes into account future stream of dividends. In Russia public company directed on dividends average 31,68% of its profits. 30 analyzed countries, the average is 64,55%, in the BRICS countries – 50,73%. Potential buyers pay attention to the attractiveness of the market. In Russia, the average rate of economic growth over the past three years was negative (-0,4%) in the 30 countries increased by an average of 2.83%. Average inflation for the period was in Russia, at 6.84%, and in other countries of the Index of 1.07%.

The value of the company will depend on financial market conditions and availability of financial services. In Russia, according to the world Bank, stock market capitalization amounted in 2016, less than 50% of GDP. The average 30 analyzed countries – 75%. The main source of capital for Russian entrepreneurs are banks which in the absence of competition with the stock market overpriced interest rates on loans. This leads to the fact that Russian companies are forced to rely on his own strength or ask the state for help.

The interviewed experts noted a number of factors that significantly lowered the valuation of Russian companies. As explained to the edition NES Professor Natalia Volchkova, we are talking in particular about violations of the rights of ownership as other shareholders, and government, as well as the risk of possible losses of companies due to sanctions.

Director for corporate governance Prosperity Capital Management Denis Spirin has noted the negative impact Russia’s reputation on the value of companies. He recalled that in the country in the 1990s – early 2000-ies there were loud corporate conflicts that violate the interests of minority shareholders. In other countries in the “doing business Index”, the corporate conflicts concerning the rights of minority shareholders, has not been seen for several years, said the expert.
In the ranking of competitive economies in the world, annually compiled by the world economic forum (WEF), Russia this year has risen to five lines and is located on the 38 place among 137 countries. Russian indicators in the Global Competitiveness Index (GCI) began to improve in 2012, when Russia was 67th. In 2013, Russia was a 64 place, but remained in the list below all of the other BRICS countries. In 2014, ranked 53rd. In 2015 45.

In the Doing Business rating, published in October 2018, the world Bank, Russia was in 35th. In 2017, Russia was at five degrees below 40.

However, almost 84% of owners of Russian companies are ready to sell part of their assets due to their inefficiencies and risks caused by, including tensions between Russia and the West. This was discussed in the report “Barometer of confidence of companies,” prepared by British audit and Advisory group EY global survey of businessmen. The document was published on 3 September on the website of EY.

3 thoughts on “Russia was among the outsiders on the value of the business

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