Andrey Berezin and his Euroinvest company have been in the media spotlight several times this year, including expanding its production assets. Our correspondent, Alexander Vasilyev, tried to find out why the company, traditionally known for its real estate development projects, needed to expand its presence in the industrial field.
In February, it was announced that the Recond factory increased the ownership of Euroinvest. However, to be fair, we have to notice that in the ownership structure of the factory, Andrey Berezin and his associate Yuri Vasiliev were presented as co-owners, controlling 47.9% shares of the factory. The other majority owners with the amount of the same claim were representatives of the Tellus Group development company.
The deal made at the beginning of the year allowed Berezin and Vasiliev to take complete control over the plant, obtaining a controlling interest. The event was a continuation of the line of acquisition of industrial assets taken several years ago.
The first point on this path was the acquisition of one of Russia’s leading electronics manufacturers, Svetlana, in 2012. Then, two years ago, another major deal took place; Euroinvest, in partnership with the already mentioned Tellus Group, took control of the Rigel company, which holds leading positions in the domestic market of batteries and accumulator batteries.
In spite of the fact that Andrey Berezin’s holding made multi-million investments in the modernization of the production facilities of both Svetlana and Rigel, both transactions left experts and observers suspicious that their main goal was not the plants themselves but the land under them, which the new owners allegedly intended to use for residential development.
Today we can already say that these suspicions turned out to be unfounded. As it turned out, Euroinvest did not plan to sacrifice its enterprises for development projects. On the contrary, the company decided to give up its status primarily as a development company to develop a full-fledged industrial-innovation sector in its structure. As for the Recond plant, it is one of the few companies in the country that managed to keep the complete cycle of radio components production at its own base and is expected to become a critical element in the high-tech plans of the holding.
Euro Venture: Take a Step Into the Future Today
Particular light can be shed on these plans by information on the results of the activity of Euroinvest’s own venture fund, called Euro Venture. Five years ago, when launching the fund, the managers of Euroinvest said that the new venture structure would focus, among other things, on projects in electronics and TechNet, the sector for developing digital solutions for industry and business.
To date, there is information in the public domain about at least two projects grown with the support of Euro Venture. With the first of them, the electronic marketplace for building materials, both the foundation and the holding had high hopes, seeing how quickly the importance and popularity of marketplaces worldwide are growing. As part of the project, they managed, for example, to create their own application for the iPhone. But external circumstances in the form of sanctions intervened, causing great questions about the ability to maintain a reliable supply of materials from abroad. And without stability in this matter, Euroinvest considers it imprudent to launch its marketplace. In a recent interview with Novy Prospect, Andrey Berezin said that he would determine the project’s fate in the foreseeable future based on the processes in the Russian and international economies, among other things.
On the other hand, the project to create a medical device to treat cancer, primarily lung cancer, is clearly on its way to mass production.
A couple of years ago, the development was demonstrated to Russian Minister of Health Veronika Skvortsova, who was pleased with what she saw. Vadim Pischik, the Head of Thoracic Surgery Center of St. Petersburg Clinical Hospital № 122 and the city’s Chief Thoracic Surgeon, who presented the device, noted its unique features: first of all, the possibility of irradiating affected tissues with X-rays directly during surgery. This will allow oncologic surgeons to combine mechanical removal of tumors with irradiation, thereby dramatically reducing the likelihood of recurrence.
It should be noted that the project was implemented by a consortium consisting of doctors from the hospital No. 122, scientists from several scientific centers, and the Svetlana plant, which has been owned by Euroinvest for ten years already; as we can see, the holding company managed to find a use for its industrial assets.
Now, as Andrey Berezin said in his interview, the necessary design consultations are being conducted, and documents are being prepared for the serial launch of the device.
The potential sales market is significant, even if, for understandable reasons, we put aside the possibility of selling to the West for a while; there are still CIS countries, India, and China, that can buy equipment worth over half a billion dollars.
It is worth adding that at the same time, another device based on X-rays is being developed under the auspices of the Euro Venture Fund. It is also planned to be used in oncology, but this time for diagnostic purposes.
However, the correction of priorities in the company’s strategic development, entering new markets, even such promising ones as medical equipment and e-marketing, would not be anything out of the ordinary. After all, many large companies are making similar efforts, and the government’s call this year for import substitution has only spurred these attempts.
Education and Human Capital Development in Russia
It is much more interesting that the top managers of Euroinvest do not consider their latest actions to be a step in the direction of an import substitution strategy. Moreover, according to Andrey Berezin, if today’s Russia and its economy need substitution processes, it is not so much in industry or financial business as in human capital development, i.e., education and professional training.
“Before, what mattered was a territory, markets, and raw materials. All this is gone and doesn’t mean anything anymore. The only thing that matters is human capital and the country’s intellectual potential. In the world, only what you can invent yourself is valued. There is a division between those who can create something and those who are useless to the world, even consumers. This is happening everywhere. The main thing for us is not to fall by the wayside at all,” Andrey Berezin expressed his position as frankly as possible in his interview with Novy Prospect.
The vital position of the head of the company is also seen in its activities. Every year Euroinvest increases its activity in educational projects, which seemingly cannot bring a direct financial return, but allow it to find new exciting specialists now or in the foreseeable future.
Probably the first such experience for the company and personally for Andrey Berezin was the partnership with the World Club of Petersburgers headed by Mikhail Piotrovsky. Together they organized the annual Prometheus Star contest aimed at supporting young talent between the ages of 14 and 17 in a variety of categories, from scientific and creative to athletic. The competition is still held today, and its winners receive unique stars made of Melchior and brass.
Later this initiative was supplemented by cooperation with the Leonhard Euler International Charitable Foundation for the Support of Mathematics. Participating in the fund’s programs, Euroinvest helped organize field camps and Olympiads for gifted schoolchildren.
Berezin and his colleagues also launched their project, a scholarship named after cosmonaut Georgiy Grechko. Students and postgraduate students from several higher educational institutions are already receiving it.
Still, the above initiatives can instead be called point initiatives, while the leaders of Euroinvest want to reach a systemic level by changing the attitude to pedagogy and the training of competent specialists in Russian society as a whole.
“To do education is not only to build schools, but also to pay teachers and professors, to create new educational programs, and to stimulate students. I focus specifically on the teaching staff. In the Soviet Union, for example, a professor’s salary was comparable to that of the deputy director of a large production enterprise. And what difference do we see if we compare their salaries today? Colossal!” Berezin points to what he considers the main problem in contemporary Russian education.
He plans to set in motion positive changes through his efforts by founding in St. Petersburg no less than an entire governor’s lyceum for gifted school students. Andrey Berezin reminds that the city has many years of positive experience of such work, including schools No. 239, 30 and Physics and Mathematics Boarding School No. 45. The staff of the latter, according to the plans of the head of the company, can form the backbone of the academy being created.
The more so that the material basis for the future educational institution has already started to be created. In the Kaselevo neighborhood on Lake Bolshoye, a plot of land has been allocated, and preliminary plans for its construction have been made. It is planned to divide the lyceum complex into several buildings to accommodate not only classrooms and living quarters but also a modern sports complex with a swimming pool, a 3d-modeling studio, and a greenhouse. Several public spaces will be created on the adjoining territory, and the pier and the beach will be equipped.
“We made a preliminary design, got the terms of reference, and started the project. It’s moving slower than we would have liked, but it’s moving forward. We will pay for the design and support the team of educators who will come to work there when the school is ready. Though it has to be a state educational institution, we are ready to sponsor it,” Andrey Berezin said, outlining the work that is already done and future plans.
Proper Business Structuring as the Key to the Prosperity of the Company
The above picture of the rapid entry of Euroinvest into the space of not even simple innovation but fundamental educational policy, of course, is encouraging. But, to be fair, one has to wonder whether such an adjustment of priorities is not forced. What if the founders of the company, which for decades has specialized in development projects, and managed to show up in such large-scale housing construction sites as Kudrovo and Murino, are simply losing the competition for their primary market?
Of course, it is not easy to get an unambiguous answer to such questions. Andrey Berezin himself discussed this topic in an interview with caution, admitting the problems that objectively exist in the housing market this year.
“We can observe the decline in development activity. It is associated primarily with the rise in mortgage prices. Although mortgages are back to their previous levels, people have become very cautious about the future. According to some reports, the volume of mortgage lending has fallen tenfold. We are introducing mortgage rate compensation programs. We have programs that allow you to get a mortgage, even at 0.1% per annum. But there is certainly a decrease in sales,” he said.
However, he also pointed to several factors which allowed the real estate development arm of the holding to feel quite confident. One of them is a prevalence of high readiness building projects in the Euroinvest Development portfolio, when, according to Berezin, the total amount of the projects is up to 400 thousand sq. m. On the contrary, the credit committees approved the granting of funds to the company for two more projects in St. Petersburg and one in the Leningrad region.
But perhaps the primary condition that determines the well-being of Euroinvest in the construction market is its reputation, which has been formed in recent years: the company is known as a builder not only punctual but also able to offer customers modern technological solutions. It is worth mentioning that this year the Union of Construction Associations and Organizations of the Leningrad Region was named the holding the most client-oriented participant in the regional construction market. Among other attractive features of the company was the 3iD housing format offered to buyers of Euroinvest apartments. This concept is based on the broadest possible use of “smart home” technologies, including public spaces and educational clubs for residents.
To sum it up: in the current complicated circumstances, Andrey Berezin and Yury Vasilyev’s company has managed to maintain the stability of its primary business and, at the same time, achieve significant success in the new business. Undoubtedly, both entrepreneurs can take this managerial success as an asset.
History and Biography
Andrey Berezin was born in 1967 in Leningrad. He studied at secondary school #239 with a profound study of mathematics. In 1990 he graduated with honors from Leningrad Ustinov Mechanical Institute. In 1990 he graduated with honors from the Leningrad Ustinov Mechanical Institute, where he specialized in automatic control systems for aircraft. After his graduation, he enrolled in postgraduate school and simultaneously went into business.
In 1993 he became one of the co-founders of the North-West Fisheries Company. In 1995, with Yury Vasilyev, he founded the investment company Euroinvest and became its Chairman of the Board.
Today Euroinvest is a diversified holding company that includes companies and projects from various economic sectors.
One of the directions of Euroinvest’s work is legal and engineering support for the developing land plots and territories in St. Petersburg, the Leningrad region, and other areas.
At the end of 2017, Euroinvest Group created its construction division Euroinvest Development, which is engaged in the construction of housing and other objects, thus forming an entire cycle development business.
A relatively new direction for Euroinvest is the agro-industrial sector. Agrocluster Krasnoye Znamya in the Pskov region specializes in producing grain and fodder for livestock.
In May 2017, the management of the Euroinvest investment company established the Euro Venture fund with an initial amount of €10M. Priority areas for investment are innovative developments in the scientific and technical sphere, as well as projects in the creative industry.