Financing the oligarchs

Hedge funds are snapping up synthetic exposure to illiquid, emerging market companies. Brokered by investment banks keen to provide emerging market investors with financing solutions, the returns can be great, but so too are the risks. By John Ferry

Russia is the place to make money at the moment. Credit spreads on Russian corporate debt significantly tightened last year, while the country's stock market boomed on the back of rising commodity prices. It's left a small number of wealthy Russian investors with significant and often illiquid equity stakes in companies, looking to raise money against those holdings without actually losing control of them. The solution, arranged by a small number of investment banks, is to provide financing to