Leonid Chernovetskyi, ex-mayor of Kyiv and former owner of Pravex-Bank tells about new business project – Chernovetskyi Investment Group
— What made you choose the investment banking industry?
— In the search for new interesting project, which could be the next project in my life after Pravex-Bank, I analysed many business proposals. What to focus on and where the future of my investments is was the most difficult issue I had to deal with in recent years.
Nowadays, the business experiences a real revolution! New technologies, the Internet, the implementation of the most incredible ideas in various areas of human activity over the next five years will literally turn the world upside down. But I do not want to be ordinary and delve into the theory. I will say that these areas are really worth investing and to be dealt with by capable entrepreneurs. This is how my new project – Chernovetskyi Investment Group (CIG) – was born.
— It is also known that you are establishing Chernovetskyi Investment Fund. When will it start working and what jurisdiction is the Fund registered under?
— Establishment of the Fund working in the joint investment area will be the second stage of the Investment Company evolution. The Investment Company is still under registration, but it works on the analysis of incoming proposals. The Fund will be registered in one of the best countries in the euro zone in terms of tax.
— What are the Fund’s amounts?
— Investment potential of Chernovetskyi Investment Group in the first stage of its development is limited to the amount from the sale of Pravex-Bank – that is $750 million. But the money in the world financial markets is not a problem! On the contrary, given the current global financial situation… When we need more – we will raise them for specific projects. The main thing is that these projects should be worth it.
— Is this your personal project, or do you have any partners?
— Currently, this project is only my personal, or more precisely, a family project. I run it with my son. Perhaps in the future, to increase the investment potential the people who are close to my philosophy of business and business management will join it. For example, those who were the customers of my bank, my partners in other projects.
As is the case with Pravex-Bank, which at its time also rose from a business idea to the business project of the first tier in the national banking sector, I would like to prepare and launch the work of Chernovetskyi Investment Group myself. Before involving the new investors and new money, I have to be 100% sure that I was going in the right direction since I treat other people’s money more responsibly than my own.
— Has the project management team been defined?
— I come back to the big business not alone, but with a big team of people, who were once engaged in work in the bank. Years of successful work unite them with me and my son Stepan. 90% of people, whom I will work with, for many years, have been my colleagues for many. I will hire the rest as a result of selection.
— But the final word in the selection of the project rests with you, does not it?
— I have the last word until all the procedures are worked out, all the processes are formalized. But, I think, won’t take long. Maybe half a year until the investment committee starts working in full force. But you may rest assured that I’ll always be an active participant in all of the company’s processes.
— Who will become the members of the company’s investment committee?
— At the first stage of the fund’s activities, I intend to entrust the examination of projects to several scientific organizations and groups of scientists simultaneously, even if it requires large expenditures. Over time, the best and most respected experts will remain, with whom we will work on an ongoing basis.
I used to be the Deputy Vice Rector for Science of Taras Shevchenko National University of Kyiv, the largest research institute in Ukraine. If I only knew then, living on wages, that once I would like to invest millions of dollars in scientific ideas and technologies, I would collect such material and such people that could turn the world upside down today…
Over time, top class international experts will also be involved in the activities of the fund and investment company in an advisory capacity. They will be top managers of major international financial companies, funds and banks. We have gained great experience working with them on other projects. We know the best, and are preparing offers for them.
— How do you accept proposals from the companies?
— Website through which the proposals for investment will be accepted is under development and will be launched in about a month. But now the applications with the business ideas and proposals are received through my personal website. We have already received a sufficient number of presentations of various projects from the Ukrainian and foreign individuals and companies that are seeking investments.
— What will be the priority areas for the investment company?
—Chernovetskyi Investment Group’s potential enables to consider projects in different areas and very significant in scale. After the analysis and evaluation of various existing markets, we came to the conclusion that the priority areas for the investment company will be: Internet, IT, high technology, development of new medical products, agricultural products processing and waste disposal, small-scale power generation, consumer goods production, resource-saving technologies, agribusiness etc. This does not mean that the company will try to work exclusively in those areas. Now we are focused on applications and analysis of proposals prospects for large-scale business. The scale is particularly important. In addition, in general, practice will give a cue for everything else.
— Do you consider only the real sector?
— At the first stage of the project, there will be only the investment company, we will focus exclusively on the real economy. Investments in financial instruments, precious metals, as well as corporate, municipal and government securities are not the issues of today, which will be relevant only after the establishment of an investment fund. In addition, these markets have long been known to us, but it is not our way so far.
— What will be the parameters of project selection?
— Investing abhors stereotyped evaluation. This approach may lead to financial loss or mistaken loss of extremely promising project. For me personally, there are two important criteria and it is difficult to say which one is more important: the project must be a large-scale and profitable in the future, but when it comes to production or services – have prospects of unlimited replication in the similar economies.
—Will you mainly rely on the existing business? Or you may consider startups or redemption of distressed assets?
— Globally, the investment company will cover the various stages of project implementation, and will focus on working with startups (ideas), research developments, business projects with full participation of Chernovetskyi Investment Group, co-investment project (share of Chernovetskyi Investment Group).
Distressed assets are not our priority, because once they are in this category, they often have no chance to success. Although I leave open the possibility that sometimes long-term and high-yield projects are transferred to the Bank only because of inefficient management or force majeure and, of course, this should also be considered. But another thing is important! We are actively looking for people able to implement any project in the best way. We find such a partner and invest money in it. My 20-year experience in doing business tells me that such extraordinary and talented people infected with the idea do exist. It is just important to see such a partner in its project, to make him a fair offer, to inspire it the confidence, to give enough money and the necessary financial and organizational control. And business will be looking well very soon.
— What will be an average investment in a single project?
— We’ll start with the amounts of $100 thousand to $20 million. We will see what we will come across. We certainly will not try to resolve “global” issues. Ultimately, much will depend on the prospects of the project and the degree of the risk predictability.
— What share of the corporate rights will the company buy when joining the project?
— The percentage of participation will be determined individually in each case. Investment applicant’s share in the first stage of cooperation may reach 50%. The question is whether it will be able to work with minimal supervision on our part, whether it shares our business philosophy.
— How the Fund will monitor its investments and take part in the management of the company?
— This is a very important issue for each investor, and for me – especially. I never mind the loss of money. But the mistakes should not be global, that is, those that put an end to my ability to correct them and continue the business even more successfully. For me, these mistakes will be equal to defeat. It would be a blow to my reputation, to my confidence in my own efficiency, as I never blame the partners of the mistakes and all attribute to my account! That’s why I never rely on other people’s decisions in business. All important decisions are necessarily considered by me and the members of my team.
We’ll have to go with a potential partner a certain way of various approvals, formalization of all important decisions, and only gradually give him wide latitude. I will not be interested in the projects, even assuming a very large profit, where I and my team will be bystanders. We are simply not interested in such money and passive partnership. Thus, I have never believed that money may just pour down. This is the mentality of losers. And I’m not so young to change my mentality.
— Will the investment be exclusively Ukrainian, or maybe the company will consider projects from other countries?
— The investments in the most attractive economies are the top priority. And that is what I think of the former Soviet Union countries. Their citizens are extremely talented people and in most cases they have not fulfilled themselves. They are able to work day and night to become rich; they generally have a good education. But many people do not have enough experience in doing large-scale business, running free finance. It is important that we have a similar mentality and can fluently speak one language. We actively monitor the Asian economies as well. Currently, for example, we are beginning to work in India, where we plan to collaborate with Bollywood in the area of web projects; we also look narrowly to Myanmar, which has become quite attractive for global investors after the country began a qualitative reform of the new government.
— Does that mean Leonid Chernovetskyi returns to big business again?
— You know, I’m really very keen on plans to attract prospective business partners, implement super interesting ideas. It seems to me that my entrepreneurial fate has never bestowed me such a chance. I feel the huge enthusiasm! I already imagine a colourful picture of the future projects. And the main character in these pictures is not the money, although there is a lot of them, too, and limitless success of all participants in a large-scale business game that we have started!
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