Gazprom and Hermitage Capital: Shareholder Activism in Russia

By John McMillan
2002 | Case No. IB36
Gazprom, the Russian natural-gas production and distribution firm which by some measures is the largest energy company in the world, has been very cheaply valued ever since its privatization. Reasons for this include the general uncertainty prevailing in Russian equity markets and the alleged corruption in the company, including serious asset-stripping by management. Hermitage Capital Management, a Russia-focused hedge fund run by William Browder, began investing in Gazprom in 1998, hoping that shrewd activism would increase its performance and also its share price. The case looks at Gazprom’s halting efforts at reform and discusses issues Browder must consider in deciding how to proceed.
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