(Adds Medvedev’s condolences paragraph 3)
By Dmitry Sergeyev and Melissa Akin
MOSCOW, Nov 20 (Reuters) - Boris Fyodorov, who advised on economic reform in the final years of the Soviet Union, served as Boris Yeltsin’s finance minister and founded one of Russia’s top investment banks, died on Thursday, his firm said.
Fyodorov, 50, was one of the youngest of his generation of Russian market reformers. He died in London after suffering a stroke, the RIA news agency quoted Russia’s embassy in the British capital as saying.
President Dmitry Medvedev, in a message of condolences to Fyodorov’s family, praised him as a professional of the higest level who made “the most audacious ideas come true.”
Fyodorov was educated in the socialist economics of the Soviet Union but went on to switch between two roles as one of Russia’s most prominent economic reformers and a financier with wide contacts in the City of London and Wall Street.
His academic credentials, thick horn-rimmed glasses and bookish manner hid a savvy investment sense.
Fyodorov had held a seat on the board of state controlled gas giant Gazprom since 2000. He said he was backed by more than 7 percent of shares, though he never confirmed the size of his stake in the world’s biggest natural gas company.
In 1994 Fyodorov founded one of Russia’s first investment banks, UFG, with Harvard educated banker Charlie Ryan, who had begun his career at Credit Suisse First Boston and come to Russia to advise on market reforms.
“Boris was a shining example that one person could combine Russian patriotism and liberalism. He was fervently pro-Russian and fervently pro-market,” said Florian Fenner, who set up UFG Asset Management with Fyodorov six years ago and now leads the company.
At Gazprom, Fyodorov played a major role in pushing for better corporate governance at the company, which in the 1990s was brought to its knees by corruption and internal disputes.
“Everybody talked about corporate governance but he was one of the only people who stood up for it, at extreme personal risk to himself, in the bad old days of Gazprom,” said Fenner.
Convinced of Russia’s lucrative investment opportunities, Fyodorov and Ryan steered UFG through the chaotic and sometimes violent Russian economy of the 1990s that was dominated by a few dozen rich businessmen, known as the oligarchs.
By the time Vladimir Putin — who both Fyodorov and Ryan had met in St Petersburg the early 1990s — was elected president in 2000, UFG was one of Russia’s most respected investment banks.
As the Russian economy boomed, foreign investment banks started to look for local purchases and Deutsche Bank bought stakes in UFG, finally taking control and turning UFG into its Russian unit.
More recently, UFG Asset Management formed a joint venture with the German bank.
UFG Asset Management announced his death in a statement e-mailed to journalists.
In the early part of the decade, the investment bank’s signature offering was a derivative which allowed foreigners to indirectly hold local shares in Gazprom despite a web of Kremlin rules and government decrees — known as the ring fence — which restricted foreign ownership.
Putin — and a then little known adviser, Dmitry Medvedev — vowed to bring down the ring fence despite vested interests inside Gazprom who wanted the restrictions to stay.
The ring fence meant that shares in Gazprom, Russia’s most important company, were significantly undervalued compared to other energy companies and Gazprom’s foreign traded shares.
Putin removed the ring fence in 2005, fuelling a surge in Gazprom’s share price and allowing UFG and its clients to earn handsome profits. By May 2008, Gazprom was worth $370 billion.
Born in Moscow in 1958, Fyodorov studied economics.
As the Soviet Union crumbled, he advised Mikhail Gorbachev’s Politburo on economic reforms and was made finance minister in 1990. He later served as finance minister under the late former President Boris Yeltsin.
“He tried to stop the crisis in the Soviet economy, which was an insurmountable task,” RIA Novosti quoted fellow liberal economist Yegor Gaidar as saying.
“But he did everything he could.” (Writing by Guy Faulconbridge; Editing by Jon Boyle)