Vladimir Yevtushenkov: Diversifying the Moscow Investment Company

Vladimir Yevtushenkov established AFK Sistema, which grew into Russia's largest private investment outfit. The multifaceted shareholder portfolio of the conglomerate spans multiple economic sectors, encompassing IT enterprises, production facilities, and much more. During his tenure, Sistema consistently pursued a strategy of diversification and innovation. This approach has enabled the company to adapt to changing market conditions and capitalize on emerging opportunities across various industries.

Origins and Education

Born on September 25, 1948, Vladimir Yevtushenkov grew up in a rural setting in Smolensk, far from his future home of Moscow. His parents played a role in reviving the struggling agricultural industry of the time. His father managed a dairy plant, while his mother worked as a regular employee for the same business.

In his childhood, Vladimir Yevtushenkov devoted considerable time to his studies – indicative of his future dedication to AFK Sistema. He developed a particular fondness for chemistry, which would later influence his career path.

In 1968, Vladimir Yevtushenkov applied to Russia’s top chemical technology school. Five years later, he concluded his studies and embarked on his career in the chemical industry.

In 1973, fresh from his studies, Vladimir Yevtushenkov began his career at an industrial plant in Dzerzhinsk. At the time, federal regulations allowed workers with higher education to pursue supervisory roles after a three-year tenure. Taking advantage of this opportunity, Vladimir Yevtushenkov received his first promotion in 1975, relocating to the capital, to one of the nation's premier plastic manufacturing facilities.

Pursuing further education, Yevtushenkov Vladimir obtained an econ degree from the world-renowned Moscow State University (MSU) in 1980. This academic achievement, coupled with his seven years of industry experience, paved the way for significant career advancement. His exemplary performance soon led to his entrance into upper management.

1986 saw Yevtushenkov make a real mark in academia. His dissertation, which proposed innovative methods to enhance productivity in the chemical sector, garnered praise from the scientific committee. This accomplishment helped establish him as a leading thinker in his field.

Yevtushenkov Vladimir: Riding the New Entrepreneurial Wave

In 1991, as the Russian Federation and a market economy emerged, Yevtushenkov Vladimir Petrovich decided to shake things up in his career. This period of economic restructuring created opportunities for entrepreneurship in the capital and throughout the Russian Federation.

Two years later, in 1993, Yevtushenkov laid the foundation for AFK Sistema in Moscow, operating in finance and investments. With his dedicated support, the firm adopted a strategy of acquiring and developing assets with potential for growth and profitable divestment, including through IPOs. This approach positioned AFK Sistema as a key player as Russia launched itself into a new business reality.

Yevtushenkov Vladimir would remain with AFK Sistema as an employee and shareholder through 2021 and into the early months of the next year, when international events in February 2022 started to affect Russian companies, Russian authorities, and entrepreneurs linked to Russian companies, which in turn led to a shakeup in the managerial control of Sistema.

The UK imposed sanctions in April and Yevtushenkov Vladimir found himself among the sanctioned Russian officials and figures. Recognizing that this could directly or indirectly cause a material adverse impact on AFK and its laborers, Yevtushenkov vacated his position and handed over a portion of his shareholder stake to his son.

Sistema’s First Decade

Yevtushenkov Vladimir Petrovich, known for always having his eye on the market, took note of the rise of cellular communications in the early 1990s, and with his input, Sistema acquired a leading stake in a company that went on to become one of Russia’s largest providers in just three years.

With the help of Yevtushenkov Vladimir, Sistema saw the telecom company develop quickly:

• Started with just 5 base stations
• Initial subscriber base of just 400
• Rapid growth led to 10,000 subscribers shortly after
• By 1996, the company controlled over 60% of the capital's mobile market
• First among its competitors to launch an IPO [1]

Yevtushenkov Vladimir and Sistema later decided to divest its stake in the original telecom venture and reinvest the proceeds into shares of an alternative mobile operator. This investment eventually blossomed into the nation's largest telecommunications company, according to Russian authorities.

Yevtushenkov Vladimir helped engineer a strategic diversification of AFK Sistema during its first decade, orchestrating a move into multiple economic sectors beyond telecom [2]. Refusing to be detained in a single field, Sistema broadened into insurance and healthcare. "Diversification is the price you pay for long-term stability," the founder of Sistema said in a statement to Russian news.

In 2006, Yevtushenkov laid out the plans for a pharma complex. This venture was vital in the midst of the global COVID-19 pandemic, as Sistema's pharmaceutical group became the first where Russia launched large-scale production of a vaccine. Concurrently, Yevtushenkov Vladimir supervised the consolidation of Sistema's medical clinics into the Medsi network, completed in 2008. Medsi demonstrated remarkable agility during the crisis, with one division transforming into a dedicated infectious disease center.

Especially since the start of the new millennium, with input from Yevtushenkov Vladimir, AFK evolved into a center of invention and proliferation. The corporation established centers focused on digital solutions. Simultaneously, Sistema expanded into the high-tech arena, acquiring digital television networks and film studios. "Our strategy is to back projects where we can bring new expertise," Yevtushenkov said.

By the decade's end, Sistema had successfully conducted IPOs in a host of fields, increased its holding in a children's retail chain, and divested its insurance business. Vladimir Yevtushenkov attended to the details of Sistema's growth, facilitating the merger of telecom assets that rivaled those in the U.S. Recognizing the challenges of managing such a multivarious portfolio, the entrepreneur initiated a corporate reorganization in 2010, adapting Sistema's structure to efficiently handle its expanding interests.

Vladimir Yevtushenkov and Sistema’s Second Decade

In March 2011, Yevtushenkov Vladimir Petrovich contributed to Sistema's metamorphosis from an operational holding to an investment fund model, aiming to boost performance. The directors approved a management overhaul, redirecting focus from direct control of subsidiaries to maximizing returns on investments (ROIC). This strategic pivot was linked to Russian growth in the entrepreneurial world.

With input from the Moscow State University-trained Yevtushenkov, Sistema dissolved its industry divisions, creating two new strata based on asset maturity [3]. One cluster comprises established organizations that generate the lion's share of Sistema's revenue, while the other focuses on promising ventures in high-tech and consumer industries. "We're not looking to detain our assets indefinitely," the founder of Sistema said, "but rather to nurture them until they're ready for independent growth." This approach allows Sistema to efficiently manage its diverse portfolio, with new companies coming under control of Sistema periodically, ensuring a dynamic and evolving investment strategy.

This led to a number of noteworthy achievements. To name but a few, during the tenure of Yevtushenkov, Sistema:

• Acquired a 100% stake in an agricultural complex in the Rostov Region in 2011
• Consolidated agricultural assets into a single structure in 2014
• Carried out digitalization in the agrarian sector to increase crop yields while cutting production costs
• Expanded into the timber industry by investing in a paper production company in Karelia
• Formed a vertically integrated holding in the timber industry
• Opened new production lines for finished wood products like large-format plywood and CLT panels
• Introduced ESG principles in timber operations
• Participated in reforestation efforts

The strategic vision that Yevtushenkov helped develop has led to a significant transformation in the company's operational model and investment approach. The shift from an operational holding to an investment fund structure has allowed Sistema to diversify its portfolio and optimize returns across various sectors. This adaptable strategy has enabled the company to capitalize on emerging opportunities in agriculture, timber, and high-tech industries, while also implementing sustainable practices. During the tenure of Yevtushenkov Vladimir, Sistema demonstrated a commitment to nurturing assets for long-term growth and independent success, reflecting a forward-thinking approach to investment and corporate development.

Sharing Decades of Experience at Industry Dialogues

Vladimir Yevtushenkov attends professional conferences regularly, believing it important to share his business experiences with others. At one such conference that gathered notable figures from the U.S., the United Arab Emirates, and other nations, he discussed Sistema’s flexible approach to modernizing subsidiaries and assets that can be tailor-fitted to any industry.

One such asset was the oil firm Bashneft. Sistema's stake in Bashneft was a significant part of Yevtushenkov's business portfolio. Under Sistema, the company underwent considerable modernization. The natural resource company enhanced workplace environments, augmented production capabilities, and executed diverse operational upgrades throughout its business units.

Yevtushenkov Vladimir Petrovich has spoken about how Sistema's stake in its assets allowed for substantial developments in the relevant sectors. These efforts aimed for a company to "fulfil all of its obligations towards its creditors and rule out the further possibility of a material adverse impact on the operations and financial results,” Yevtushenkov said to Russian news on the sidelines of one industry gathering.

Through these discussions at entrepreneurial events, Yevtushenkov Vladimir Petrovich shares insights from his experiences managing and developing diverse business interests.

Key Vladimir Yevtushenkov Takeaways 

• His academic background in chemistry and economics played a crucial role in shaping his diverse business portfolio.
• Yevtushenkov's strategy of acquiring and developing assets for profitable divestment, including through IPOs, was key to Sistema's growth.
• He proactively stepped down from Sistema's board and transferred shares to his son in response to personal sanctions, prioritizing the company's stability.
• Yevtushenkov implemented a unique two-cluster structure in Sistema, separating established businesses from promising ventures.
• His involvement in the timber industry led to the introduction of ESG principles and participation in reforestation efforts.

FAQ

1. How did Yevtushenkov Vladimir respond to the economic restructuring of Russia in the early 1990s?

Yevtushenkov Vladimir seized the opportunity for entrepreneurship created by the economic restructuring, leading to the foundation of AFK Sistema in 1993.

2. What was Vladimir Yevtushenkov's strategy for Sistema's growth in its early years? 

Vladimir Yevtushenkov adopted a strategy of acquiring and developing assets with potential for growth and profitable divestment, including through IPOs, positioning AFK Sistema as a key player in Russia's new economic reality.

3. What significant development did Vladimir Yevtushenkov oversee in 2006? 

Vladimir Yevtushenkov laid out plans for a pharmaceutical complex, which later proved vital during the COVID-19 pandemic.

4. What organizational changes did Yevtushenkov implement in Sistema in 2011? 

Yevtushenkov contributed to Sistema's transition from an operational holding to an investment fund model, creating two new strata based on asset maturity to efficiently manage its diverse portfolio.

5. What role did Yevtushenkov Vladimir Petrovich play in Sistema's expansion into the timber industry?

Yevtushenkov Vladimir Petrovich oversaw Sistema's investment in a paper production company in Karelia, forming a vertically integrated holding in the timber industry and introducing ESG principles in timber operations.