Atomic Heart’s backer GEM Capital to invest $45M in CEE. It is a Russian fund founded by ex-Gazprom

GEM Capital, a Cyprus-based investment firm, has just announced its plans to invest $45 million into gamedev across the CEE region. As AIN.Capital learned, it is a Russian fund founded by Anatoly Paliy, who previously worked at Gazprom, a state-owned multinational energy corporation, and has close ties to the sanctioned Russian state-owned VTB bank.

What connects GEM Capital, Gazprom, and VTB Bank

• GEM Capital was founded in 2017 by Anatoly Paliy. After getting his degree and working for PwC in Paris, he came back to Russia in 2005 to work as an assistant to the head of Gazenergoset (“Газэнергосеть”), Gazprom’s (“Газпром”) daughter company, and the deputy general director then up until 2013.
• In 2013, Paliy used his experience and finances made in Gazprom to create First Oil, which was later incorporated into GEM Capital.
• In 2019, GEM Capital sold its shares of First Oil to Yakov Goldovskyi, founder of SIBUR (“CИБУР”), taken over by Gazprom in 2002, and Korund-Cian (“Корунд-Циан”), a producer of a variety of chemical products for military, industrial, agricultural, and household use. Russian VTB bank, 75,5% of which is owned by the state, financed the deal.
• In 2021, Goldovskyi sold back Korund-Cian to GEM Capital. Once again, VTB participates in the deal as the owner of the quarter of the shares.

AIN.Capital reminds that after the Russian invasion of Ukraine, the VTB bank was sanctioned by Western countries, including the US, in order to limit the money the Russian government spends on the full-scale war it launched on February 24, 2022.

GEM Capital invests in Russian projects

GEM Capital is a Russian fund, which is also run by Russians, including Kirill Gurskiy and Roman Gurskiy as Managing Directors. The company doesn’t mention its ties to Russia in any way, highlighting only its international focus and offices in Paphos and Dubai. As a lot of examples show, Cyprus is one of the most popular jurisdiction Russians prefer to chose for moving their companies. GEM Capital is the investor of several game tech startups “originating” from Cyprus.

• Mundfish is one of GEM’s portfolio companies. The game studio was founded in 2017 by Russians in Cyprus and is best known as the developer of Atomic Heart, a USSR and communism-glorifying shooter that makes fun of the killings of Ukrainians, collects gamers data for the FSB, and is used to sell Russian military equipment.

• Owlcat Games is another company founded by Russian. It is the developer of Kingmaker: Pathfinder and Warhammer 40000: Rogue Trader. On several occasions the company stated that it completely left Russian, moving to Cyprus, but was still hiring for its Moscow office.
• Other less popular companies include the Belarus developer Weappy (This Is the Police), Unfrozen Studio (Iratus: Lord of the Dead), and Eschatology Entertainment.

It is not the first case, when the investment fund positioned itself as international, but is closely tied to Russia. Previously, we investigated London-based Flashpoint’s year-to-year activities and shared the story of its transformation from $10 million Moscow-based Buran VC to the international technology investment firm with $500 million AuM and 7 offices worldwide.