Co-owner of Euroinvest Group Andrey Berezin told “Novy Prospect” about the plans to grow development business in St. Petersburg, a device to fight cancer, staff shortage which “kills” science and industry, and the sale of a gold mine in Africa.
Andrey Valerievich, you’ve been the owner of the region’s major land assets for many years. How has your land portfolio changed recently?
– Generally speaking, the land bank does not have any significance in today’s activities of Euroinvest. The competence of the developer, his experience and his feeling of the market conditions are much more important. The experience of our development subdivision, Euroinvest Development, can in fact confirm that. Today the company builds housing both on its own land and on the land plots of its partners. It started with economy class projects in Murino and Kudrovo, and now it also works in St. Petersburg. Its projects are absolutely different;they are for different demand. For example, a special feature of “ID Murino” is its co-working spaces and public spaces. But “ID Moskovsky” has no co-working spaces at all, but has a spa on the roof. As for “ID Park Pobedy”, there will be a whole cluster of educational classes for children and adults on the first floors. It is a new consumer trend. In the future, Euroinvest Development will take up complex development.
How big is Euroinvest Development’s project portfolio now?
– We have about 200 thousand square meters of residential space in progress and the same amount is under development. The company does not have a goal to build millions of square meters per year. But it has to be high-quality housing built quickly. Speed affects the prime cost and allows the company to be prepared for any stress tests. In addition, the relatively small volume of development gives the opportunity to effectively manage prime costs and sales.
In general, has setting up your own development company met your expectations? After switching to escrow accounts, what has changed for you?
– It was the right idea, and it has paid off. If we talk about the use of escrow accounts, by and large, they have only positive effects on the market. Reliable builders with good reputations no longer have problems with financing.
How are your relationships with the banks? Do they lend you money willingly?
– We have no problems with banks. They even compete, perhaps, for the opportunity to work with us (using escrow accounts). Besides, we have enough of our own funds and other sources of financing.
One of your main assets is the Svetlana plant. You recently announced an additional issue of shares. What will the funds be used for?
– The emission is a standard procedure for raising money for development. The situation in the electronics market is difficult at the moment. Many enterprises are in a difficult situation: the government can’t afford to support them and the volume of orders is falling. That is why we had the idea of creating an electrovacuum holding on the basis of Svetlana. At the moment we are carefully studying the products of competing plants which found themselves in a difficult economic situation in order to lock up their orders, capacities and, most importantly, personnel. So part of the proceeds from the issue will be used to buy new production assets and integrate them into Svetlanas structure.
When will it happen?
– I think it will happen this year.
Do you speak only about the enterprises which are close to Svetlana in terms of the subject matter?
– Absolutely. You have to do what you know how to do.
During the years that you have been a co-owner of Svetlana, have you managed to do much of what you planned?
– The main achievement is that we have saved the plant. A year ago, the plant celebrated its 130th anniversary and remains one of the leaders of domestic electronics. We managed to retain our staffwho work on innovative developments, and attract young staff. This is a huge achievement! At our Svetlana-Electronpribor, the average age of our employees is about 40 years old. This is a very good indicator for the industry.
Have any new products appeared in Svetlana’s portfolio that you can talk about?
– Yes, they have. In the coming year we are going to spend additionally more than 1 billion rubles on the development of new directions. One of the topics is the production of microwave devices for radio-electronic equipment, including those for outer space. The second one is the technology of silicon carbide substrates (SiC) for microwave UHF devices. They are important for the development of radio communication and radiolocation, especially for 5G networks and power electronics. China and America have this technology, but Europe does not. Therefore, European businesses are very interested in cooperation with our company on this issue. This is a global story.
Recently, Svetlana set up an innovation subdivision, where many specialists from the Institute of High Frequency Currents (which is going through hard times right now) moved. What does the division do?
– It is working on new hardware technologies, in particular, a high-frequency generator. We have already started working with Rosatom on this project – we are building a 100 kW unit for special high-temperature ceramics.
How did Svetlana Holding finish last year?
– All of the group’s enterprises (as you know, we have three of them: Svetlana-Rentgen, Svetlana-Electronpribor, and S.E.D-SPb) are profitable and face the future with confidence. When the covid storyfirst started, we did a stress test on all of our structures and even in the worst case scenario we saw almost no risks for ourselves. And in fact, we went through this difficult period even better than we expected. The holding company’s revenue for 2020 will grow by more than 10%.
What is more profitable for you personally now: development or production?
– Production, unlike development, can’t give you a quick profit. It requires investments, it has a long history of development. But production is more interesting in terms of capitalization. I am talking about capitalizing the teams who can do something. Unfortunately, the further we go, the more problems we have with human resources. There are many potential orders, there is money to pay for them, but there are no hands and heads to fulfill them. So competent teams will be valued more and more. In this sense, production is more promising, it has a future.
Does the government somehow help you in the development of scientific research?
– Yes, it does. Last summer we received a small privileged credit (about 30 million rubles) from the Petersburg Industry Development Fund for the purchase of equipment for Svetlana-Electronpribor. But we try to treat the state assistance carefully and not to take advantage of it.
Tell us about the purchase of the Riegel plant in St. Petersburg. Why did you buy it and how will you develop it?
– Riegel has the most advanced integrated engineering team in the country for creating high-capacity lithium-ion batteries. But no one was involved in the enterprise for more than two years. The picture that we and our partner Tellus Group saw when we bought the asset was deplorable: the plant had nine state orders, but they were all blown up. Riegel had to be rescued, including in the interests of the state. You know, if you can buy an accumulator from China for business purposes, then the defense industry needs their own domestic accumulators.
We intend to develop Riegel’s production further. In one year, we invested 400 million rubles in it. Some of the plant’s old contracts have been completed and the rest are on schedule. There are also new promising areas which we are considering. One of them is creating autonomous power supply systems for the Far North. This is a very profitable story. Cooperation is possible here with both city enterprises and companies from other regions.
Will there be any redevelopment of the Riegel territory?
– It’s possible. But not before we’ve fully set up manufacturing there. There is excess space on the Riegel site. If you remember, there were such things at Svetlana when we came there: half-built buildings from the Soviet times, buildings with 20-meter high trees on the roof, greenhouses, workshops with broken windows… We had to do something with all that. It was not even a question of development but a question of asset management. At Svetlana we packed up and sold everything “surplus” and used the proceeds to develop production. The same is likely to happen at Rigel. But selling and developing is not our main goal. It is much more important to maintain and develop manufacture. There will be no redevelopment to its detriment.
Your partner in the Riegel deal is Elena Smotrova’sTellus Group development company. What is their interest in this story?
– We have common interests. A partner went into this project with us to make batteries. It happened in March, just before the first wave of the coronavirus. Because of the pandemic, we had to adjust our management and investment plans. It is clear that in the case of Riegel, it will take us a long time to recoup our investment. But I’ll say it again: any development story cannot be to the detriment of production. All the partners understand that. This is our common position.
Your management company Murino coordinates the work on infrastructure development in Murino-Devyatkino. How is this work progressing? Are there any problems?
– MC Murino is directly responsible for water supply and wastewater disposal in Western Murino. Everything is great with this. But some time ago we were asked to coordinate the construction of an interchange to connect Murino to the Ring Road. Such a wonderful social burden. It was supposed to be a public-private partnership. In the end, of course, the interchange was built, but … some developers have not fulfilled their obligations to finance the project: someone went bankrupt, someone could not. And MC Murino had to close these debts at their own expense. We coped with this task, although, I emphasize, this is absolutely non-core story for us and the costs were not compensated by anyone.
If you are again asked by the authorities to be a coordinator for some important infrastructure project, would you agree to it?
– Of course we would consider such a request, but we will be more attentive to other participants in such consortiums.
Euroinvest Development was completing the projects in Leningrad region after Navis went bankrupt. What do you think of this experience?
– Yes, we completed building the Sozvezdie housing estate and the ShcheglovskayaUsadba housing estate. In this case, too, an interesting legal conflict arose: we completed and handed over the projects, and then the external manager sued us and wanted us to pay something for the former property developer.
Apparently, you will no longer take on the construction of other people’s projects…
– This requires a clearer legal framework and better agreements with the authorities.
Some time ago you had ideas in the field of waste recycling. Have they developed?
– The company Euroinvest has nothing to do with garbage recycling, and has never had anything to do with it. Indeed, at one time there was talk that we could have entered one of these projects, but the decision was never made. The issue was closed a long time ago.
You had a gold mine in Burkina Faso, Africa. Is it still yours, or have you sold it?
– Yes, I sold it to the players. The subject is also closed. It is impossible to do serious business with a place and people you don’t really know.
You were personally going to participate in the projectof Shopping and Entertainment Center “Hollywood”near Pionerskaya Metro station, but then you left it. Why did you leave?
– Because there are a lot of other interesting things that require my attention and are much more important to me than the creation of a typical shopping mall.
“Hollywood” had problems with approvals, there were lawsuits. Do you know how things are now?
– As far as I know, the problems have been solved, at least the construction is going on. Everything is fine.
Does your venture foundation “EuroVenture” have any new projects? What is promising at the moment?
– One of the key projects of the foundation at the moment is the creation of a unique medical device for the treatment of oncological diseases. This device will act with a beam of X-rays on internal tumors and thus prevent them from developing. We presented a prototype of the device at the Russian Industrialist exhibition. Now it is being clinically tested. According to preliminary estimates, the future sales market only in CIS countries, India, and China is estimated at almost $500 million. On the market, this device will cost about $500,000. This is 3 times cheaper than the nearest western counterpart.
Will Svetlana be in charge of the device’s production?
– Considering that it is based on a unique X-ray tube created by Svetlana-Rentgen specialists, it would be logical to assemble the complex at our site. Preliminary investments in the creation of production and sales of this device are estimated at 200 million rubles. I think we will look for co-investors. Perhaps even in the form of public-private partnership. Generally speaking, the situation with the pandemic has shown that medical developments remain relevant, so medical electronics will be the focus of the EuroVenture Foundation.
What impression do today’s young people make on you? Isn’t it time to start investing in education?
– This is the most important question that the country has at the moment. If in the USSR personnel, including scientists, were trained in thousands, and manufacturers could choose, now it is not thousands but dozens of people, and in some areas there are only a few specialists. This is a huge problem. So far it is still possible to ride out the present situation with the help of old personnel, but in 5-10 years it will be a disaster. So the main task of the country, in my opinion, is to actively invest in personnel in the next 20 years, otherwise there will be no breakthrough. We ourselves actively support education, we give grants. But such private initiatives are not enough – we need a state policy.
Can you give an assessment of the investment climate in the region? How has it changed over the past year?
– Let me not evaluate it…
Is it that bad?
– Let’s just say that the climate has remained the same.
What is money for you personally and do you need a lot of it to be happy?
– You know, when they put everyone under quarantine in the spring, I went to the country house. And somehow it became clear that I personally do not need a lot of money. I need it to do something interesting, to develop something. And when there is lockdown all around, you sit around and enjoy life. There is no fuss, no rush, everything is measured, but you get bored quickly. And you realize that you have to do something. Not for the money, but because movement is life. And money is energy. Up to a certain point it gives a person freedom. And then either you understand where and what you can use it for, or you become dependent on it. Everyone makes this choice for themselves.
Synopsis of “Novy Prospect”:
Andrei Berezin was born in 1967 in Leningrad. In 1990 he graduated with honors from Ustinov Leningrad Mechanical Institute with a degree in automatic control systems engineering.
In 1993 he participated in the creation of the North-West Fisheries Company.
In 1995, he co-founded Euroinvest Investment Company with YuryVasiliev, and has been its Chairman of the Board ever since.
Today Euroinvest is a diversified holding company, which includes companies and projects from different economy sectors.
One of the directions of Euroinvest work is legal and engineering support for the development of land plots and territories in St. Petersburg, Leningrad region and other regions.
At the end of 2017 Euroinvest Group created its own construction division “Euroinvest Development”, which is engaged in the construction of housing and other objects, thus forming a full cycle development business.
IC “Euroinvest” as a shareholder participates in modernization and development process of PJSC “Svetlana”.
A relatively new direction for Euroinvest became the agro-industrial sector. Agrocluster “KrasnoyeZnamya” in the Pskov region specializes in the production of grain and livestock fodder base.
In May 2017 the managers of IC “Euroinvest” established a venture foundation EuroVenture with the initial volume of €10 million. Priority areas of investment are innovative developments in the scientific and technical sphere, as well as projects in the creative industry.