Russia billionaires fund Putin-backed business school
Friday, September 22, 2006, 08:28
President Vladimir Putin and Roman Abramovich, Russia's richest man, are backing a Moscow business school as entrepreneurs struggle to find trained managers amid an economic boom across the former Soviet Union. The two men attended a groundbreaking ceremony on Thursday for what will be the Moscow School of Management, brainchild of Ruben Vardanian the 38-year-old president of investment bank Troika Dialog. Abramovich, who owns London's Chelsea soccer club and has an estimated $18 billion fortune, is one of the wealthy Russians helping to fund the $300 million project. Russia's economy is expected to surpass $1 trillion next year, making it Europe's sixth biggest. Fifteen years after the fall of the Soviet Union, the nation of 144 million people doesn't have a school that offers Masters degrees in Business Administration similar to those offered abroad, said Vardanian. „Russia has a specific problem, for 70 years there was no business education here,” Vardanian, who will be the school's president, told reporters in Moscow on Wednesday. „We don't need one business school, we need many. We might have schools with names and smart professors, but we don't have a school of accumulated knowledge.”
An eighth year of economic growth is exposing Russia's limited pool of qualified managers. „Today at a time when Russia's economy is expanding rapidly, demand for highly qualified managers is incredibly great,” Putin said at the groundbreaking ceremony. „Business feels that problem and it's difficult to solve without your own infrastructure.” Vardanian is one of 13 individuals and companies pumping $5 million each into the school over the next three years. Abramovich donated the land on the western outskirts of Moscow, which may be worth around $21 million, according to property consultant Jones Lang LaSalle's Moscow office. The school will cost $128 million to build and will have a $100 million endowment. Another $32 million will be spent on startup costs and the government will set up a $18.7 million venture fund that may invest in companies founded by students.
Abramovich dropped out of university just before the Soviet Union's collapse in 1991 to become an oil trader and, eventually, a business partner of Boris Berezovsky, then one of Russia's best-connected tycoons and a member of former President Boris Yeltsin's inner circle. Abramovich later received a law degree through correspondence courses, said John Mann, a spokesman for Abramovich's Millhouse LLC. Billionaires Rustam Tariko, owner of ZAO Russian Standard Bank, Alexander Abramov, founder of steelmaker Evraz Group SA, and Alexei Mordashov, chief executive of OAO Severstal, are also contributing. The school's founders may also teach classes. Of the approximately 80 institutions offering MBA programs in Russia, few come close to Western standards, according to Yekaterina Gorbunova from Moscow-based MBA Consult, which advises Russian students on business schools. Hundreds of Russian students enter such programs each year, she said. Tariko, billionaire banker Alexei Ananiev, who co-owns ZAO Promsvyazbank, and Deputy Economy Minister Kirill Androsov are among prominent Russians who earned MBAs abroad. Androsov and Ananiev got theirs from the Chicago School of Business, Tariko from INSEAD in France. Troika's Vardanian attended a one-month graduate course at Harvard.
„Demand for managers and ambitious people in Russia is huge,” said Vardanian. „The school is important for our country and our companies. It is a signal that our elite understand the need to combine forces to make a breakthrough.” Troika and other investment banks working in Russia are paying record salaries to attract talented traders, analysts and bankers. Many companies have hired foreigners to run their business, including Trust Investment Bank, which poached American Michael Eggleton from Merrill Lynch & Co. this month. Juice maker OAO Wimm-Bill-Dann snagged former Coca-Cola Co. executive Tony Maher, an Irishman. Don-Stroi, a Moscow developer of elite housing, can't expand as fast as it would like because of a lack of skilled managers, Chief Executive Officer Timur Batkin said in an interview last week. „Every year sees increasing demand for skilled workers,” Putin told the school's founders in March. „There is a shortage of such people in the country and we need to move quickly.” Putin last year called for the creation of two business schools within two years, one in Moscow and one in his hometown of St. Petersburg. The Moscow School of Management is expected to open its doors in 2009. About 150 to 200 students will be accepted into the MBA program annually. Tuition will be $50,000 a year. The school will also offer executive programs. Economy Minister German Gref, speaking at the groundbreaking event, called the lack of qualified managers „an extremely large problem for Russia.” (Bloomberg)