Russian Money in Britian’s EB-5-Like Program
Story re-posted from September 09,2014 http://eb5news.com/categories/9-general/posts/333-russian-money-in-britian-s-eb-5-like-program
Britain operates a similar program to the U.S.’s EB-5 Immigrant Visa, where three-year investor visas are granted to foreigners who invest £1 million or more in government bonds. Whereas in the United States, 80 percent of the immigrants are Chinese, in Britain it’s the Russians that are making the most impact.
An article in The Economist describes how the wealth the Russians are bringing to the country have effectively “honey trapped” the government, making if difficult for them to attempt to scare off the oligarchs as crisis occurs in the Ukraine.
“Russian wealth has permeated the upper reaches of society in Britain more completely than in any other Western country. The amount of money that post-Soviet oligarchs have pumped into “Londongrad” means, say critics, that David Cameron’s government will never crack down on them, no matter how incensed it is by Russia’s enormities.”
A prime example of how the Russian’s wealth is being distributed into Britian can be found in the case between Roman Abramovich, the billionaire who owns Chelsea football club, who was in a legal battle with the late Boris Berezovsky, another expatriate tycoon. The case generated legal costs of around £100m.
This is how Britain’s program works:
- invest £1,000,000 or more in UK government bonds, share capital or loan capital in active and trading UK registered companies
- apply to settle after 2 years if you invest £10 million
- apply to settle after 3 years if you invest £5 million
Russians were granted 433 of these visas between the third quarters of 2008 and 2013, more than any other nationality. Only the Chinese came close, with 419. According to the Independent Schools Council, 8.3% of private schools’ non-British pupils last year were Russian. That could mean up to £60m a year in fees. The number of Russian pupils has doubled since 2009.
The program guidelines stipulates that immigrants can’t invest in companies mainly engaged in property investment, property management or property development. But that doesn’t mean they aren’t buying property, According to Savills, an estate agency, 4% of buyers in “prime central” areas, such as Chelsea and Westminster, are Russians, spending £6.3m on average, explains the article.
Additionally, “Some 28 Russian firms, with a market value of £260 billion, are listed on London’s main exchange (compared with just two in New York). Another 15 Russian-focused firms are on the AIM market for growth stocks. Dozens more have depositary receipts (special overseas shares) that are traded in London. Some $46 billion of Russian stock has been sold in London IPOs since 1996, according to Dealogic.”
According to VisitBritain, in 2012 Russian visits to Britain were worth £240 million ($402.2 million), equalling a £1,057 average spend per visit, almost double the overall market average of £600 per visit. There has been a 64 percent rise in Russian visitor numbers to the U.K. from 2009 to 2012.
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