April 27 (Bloomberg) -- Elena Baturina, for many years Russia’s only known female billionaire, is prowling for real estate opportunities in Europe and the U.S. as she seeks to expand her property empire in exile.
Baturina, who began building her fortune manufacturing plastics and saw her biggest success after entering the housing construction business in the 1990s, left Russia more than a year ago, after her husband, former Moscow Mayor Yury Luzhkov, was fired during a political spat with President Dmitry Medvedev. She now spends most of her time in Austria and the U.K., where the couple’s two daughters are studying.
“I am considering entering the European real estate market, not just as an investor but as a real developer, a builder,” Baturina, 49, said in an April 13 interview in London. “Perhaps it will result in buying a European company, most likely in Germany or Austria.”
Baturina, who was summoned last year for questioning as a witness in a corruption probe involving funds from the city-controlled Bank of Moscow that ended up in one of her bank accounts, was considered to be Russia’s richest woman before moving abroad. She said her fortune still tops $1 billion and declined to elaborate on her specific holdings. She said she plans use about $700 million to create two real estate investment funds that will be used to develop building projects and office space management opportunities in Europe and the U.S.
In December 2011, Baturina sold ZAO Inteco, one of Russia’s largest development companies, to a partnership that included Russian developer and Binbank President Mikhail Shishkhanov, and a business unit of OAO Sberbank, for an undisclosed sum. At the time of the sale, the company had more than 13 million square feet of mainly housing projects completed or in development and, according to the company website, was worth $1.2 billion.
A Moscow native who graduated from the State University of Management, Baturina held onto a number of Inteco’s properties, including a golf and ski resort in Austria, and hotels in St. Petersburg, the Czech Republic and Kazakhstan. Today she owns five hotels, including The Morrison in Dublin, which she bought in March 2012 for $30 million. She said her goal is to own or manage at least 14 hotels around the world by 2015.
“We are now looking at France, Belgium and the Mediterranean coast of Africa,” Baturina said. “If I decided to realize all of the opportunities I see, I would perhaps need about 3.5 billion euros.”
Baturina said she will commit almost $300 million of her own money toward developing a four-star hotel chain across Europe, while looking for outside investors to contribute about $600 million more. She declined to name her partners. She also is looking to build in Morocco, including a possible string of boutique hotels, as well as a resort and residential complex on a 250-acre plot of land she owns along the Mediterranean coast.
Baturina is also focusing her resources on philanthropy and earlier this month, at the Milan Design Week conference, announced she will be dedicating $100 million to the Be Open Foundation, a charity she created in April to support young talent in architecture, design, art and other disciplines.
In September 2010, President Medvedev fired Luzhkov as Moscow’s mayor after numerous media reports accused the political appointee of corruption and favoritism toward his wife. Luzhkov, who had led Moscow for almost two decades, claimed he was let go because Medvedev questioned his loyalty.
Five months later, eight months before Baturina announced the sale of the firm, Moscow police raided Inteco’s Moscow offices.
Last year, prosecutors summoned Luzhkov to testify in the Bank of Moscow corruption case. At issue: the city government’s 2009 purchase of a stake in the bank for more than $400 million, according to an Oct. 27, 2011 e-mail statement from the Russian Interior Ministry. Investigators asserted the bank had loaned about $380 million to ZAO Premier Estate, a Russian property company, and that those funds eventually landed in an Inteco bank account controlled by Baturina.
Baturina was named as a witness in the case in 2011, less than a year after she left Russia, and was called to testify three times during 2011, each time by way of summonses sent to the Inteco offices in Moscow. In October 2011, investigators released a statement that said Baturina had ignored the requests and, in January, the Interior Ministry announced on its website that it was preparing to ask Austrian authorities to summon Baturina as a witness on their behalf regarding a case of “embezzlement” at the Bank of Moscow. Luzhkov and Baturina have denied wrongdoing.
Baturina said in a September 2011 statement that the funds were payment for a 2009 land sale to Premier Estate. She said in an April 23 e-mail to Bloomberg News that neither she nor Inteco have ever been connected to Premier Estate. Luzhkov has said his troubles in Moscow are political retribution for comments he made to the media in October 2011 that labeled Medvedev “weak” and incapable of resolving the country’s issues.
Against this backdrop, and despite her real estate foothold in Western Europe, some industry observers are skeptical Baturina will be able to achieve the same success outside of Russia that she had within.
“Most real estate developers are successful due to a combination of their professional understanding of real estate and their local connections,” Darrell Stanaford, a Moscow-based real estate analyst who worked as managing director for CBRE Group Inc. in Russia from 2005 to 2011. “For this reason most developers that are successful in one market are not successful in other markets unless they are exceptionally professional.”
Baturina has plans to use her investment funds and her foundation project to dig deeper into business and the professional community she covets.
‘’Developing the foundation gives me the possibility to meet with very creative people,” she said. “Since I spend most of my time in Europe, why not meet new people here, and why not introduce them to what we have in Russia?”
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