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Wednesday, 22 February 2017

Read the small print: Russian risks remain for the unwary

Read the small print: Russian risks remain for the unwary:

"As a list of investment risk factors go, the 30 pages of potential downsides that Russian steel group Severstal provided on a recent prospectus for a fundraising round worth up to $4.5bn was brutally honest.

The list included the standard legal jargon on the unpredictable potential of an easing of global growth, the cyclical nature of the steel industry and the threats posed by inclement weather. But the prospectus also included a series of warnings acutely specific to Russia that spelt out just what investors could expect from the country.

Warnings of potential state interference into industries, political pressure placed on companies, corrupt court proceedings, bribery, organised crime and the threat of tax investigations and imprisonment against executives jump out in a prospectus that itself warns that only “sophisticated investors who are familiar with and who fully appreciate the significance of the risks involved” should apply."



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