Money & Me: ‘I invest my disposable income in technology companies’

Entrepreneur Vladimir Mlynchik started his career working for an energy company before establishing energy storage production company Volts in Russia.

Mr Mlynchik, 35, relocated to the UAE from St Petersburg, when he moved the headquarters of his company to the Emirates at the invitation of an Arab investment company in 2019.

Volts UAE commenced operations in collaboration with Abu Dhabi's Masdar City. By 2023, the company established a showroom in Masdar City and initiated the production of energy storage devices.

“On a global scale, my team and I are building an energy holding company in Abu Dhabi called E2E. I am the founder and a board member of the companies within the holding. This entity manages our assets, and all of our activities are centred around renewable energy,” Mr Mlynchik says.

“We manufacture energy storage systems that accumulate electricity from solar and wind power. As for my role in the holding, I manage assets and create new businesses.”

He currently lives in Abu Dhabi and his educational background includes a degree in electrical engineering and a Master of Business Administration.

Did wealth feature in your childhood? What did you learn from it?

The most significant wealth I had during my childhood was strong family values. Additionally, I come from a family of electrical engineers – my grandfather, father, and mother were all in the field. They taught me a lot, and their experience and knowledge are the true inheritance I received.

My father also ran a business and helped me in the early stages of my career, offering guidance and sharing practical management skills rather than financial support.

How did you first earn?

My first earnings came from a small business I started in my youth. I ordered items from England using a credit card and sold them online. People were willing to pay more for high-quality goods, especially to someone who could handle the complexities of payment and delivery for them.

At the same time, I worked for an energy company, travelling to different sites to perform electrical measurements and various tests. It was complicated but fascinating.

How do you grow your wealth?

I invest all the additional money I earn (except for what I spend on living expenses) in technology companies. In my opinion, it is the most reliable way to grow my wealth.

Vladimir Mlynchik says comparing returns from different investments is his area of expertise. Victor Besa / The National

Are you a spender or a saver?

I’m a spender. I believe it’s much easier to earn a million dollars than to save a million dollars. However, I do have moments of total cost-cutting where I look for ways to optimise expenses, both in my business and personal spending.

I enjoy economics and managing finances. Calculating rates and comparing returns from different investments is my area of expertise.

What has been your best investment?

My best investment was pursuing my MBA. At the time, the cost of the programme was very high for me, but it was worth it. Business education significantly developed me, broadened my horizons, shifted my mindset and provided me with an incredible network of connections.

How do you feel about money?

I don’t stress much about money. I believe it’s important to part with it easily, not to be greedy and to help those around you. In essence, money is just a tool. And if I manage to earn this money, first of all, I must invest it in the development of humanity.

Any financial advice for your younger self?

I would advise my younger self to focus more on understanding how to attract investments for projects. This advice could have helped me avoid certain mistakes, which later cost me significant time and resources to fix.

What luxuries are important to you?

I’m not fond of luxury. For example, I wear Garmin watches to track my heart rate and other health stats because I’m into sports. I don’t need to wear expensive watches.

What I truly enjoy are gadgets and modern technologies. For me, luxury is the ability to invest in developing something new, innovative and exciting.

What are your financial goals?

My goal is to build a sustainable tech company that pays dividends to shareholders annually. In terms of capitalisation, the company should be valued at approximately $100 billion by 2044.

My business partner, our team and I have created a 40-year strategy for our financial goals. The plan contains not only the evolution of our companies but also my role and contributions at the age of 75.

We’ve set a target capitalisation for all our companies, using BP’s $100 billion valuation as a benchmark. We believe that over the next 40 years, we can achieve a similar level of success.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”