Gazprom considered the possibility of participation in venture funds

OJSC Gazprom considered the possibility of co-investing in Russian and international venture capital funds in accordance with the instructions of the President of Russia from November 3, 2011 and of the Russian Government from January 31, 2012 under which the companies that are fully or partly owned by the state and approved their programs of innovative development should consider the possibility of participation in co-investing in Russian and international venture capital funds on the principles recommended by the government.

As reported by the Department of Information of the Energy Company, Gazprom proceeds from the need to address the primary objectives of its technological development when assessing the effectiveness of co-investment in Russian and international venture capital funds.

At the same time the projects in the energy sector have a long investment cycle, they are capital-intensive and with limited scope, and cover only 2% of all venture capital investments of classic venture funds. It is noted that major oil companies, as a rule, do not act as co-investors of ordinary venture capital funds.

Thus, the financing of innovative developments of Gazprom’s interest by independent venture funds will have low commercial attractiveness for them. In turn, since the search and selection of projects is carried out by funds themselves, it is expected that the vast majority of developments in funds’ portfolio will not meet the needs of the company.

Gazprom notes that participation in co-investing of non-core projects through venture capital funds for a profit would be contrary to the basic principles of its work which is target payout.

Nevertheless, the Board of Directors instructed the Management of Gazprom to continue considering of the possibility of the company's participation in Russian and international venture funds. The results will be presented to the Board in the fourth quarter of 2013.

Gazprom said in 2008 about the intention to create a corporate venture capital fund Gazprom. The initial asset of Gazprom Venture fund will be 900M RUR, and it is planned to increase the asset to 20B RUR in five years.

It was planned that Gazprom venture will create five project companies, grouped by technological similarities. The Board of Directors of Gazprom agreed the acquisition of 100% stakes by Gazprom venture in established companies with limited liability - The First Venture Company, The Second Venture Company, and etc. by analogy.

Gazprom venture monitors, controls and manages the project companies for the implementation of projects, organizes the sale of projects’ results (in the form of technical documentation and licenses for serial production), as well as conducts the search and selection of new projects to invest in.