Austria’s Red-Stars.com, a major investor in Russian Internet projects, has said it is closing down its operations – but the four Russian companies in which it has interests say they will not be significantly affected by the move.

The decision to shut down the company, specifically formed to invest in Internet-related projects in Central and Eastern Europe, followed statements by its main investors, including Germany’s Siemens, that they would provide no further funds.

"At the general assembly of Red-Stars.com data AG held on July 31, 2001, the majority of shareholders voted for liquidation of the company," said Sylvia Schwarz, a spokeswoman for Siemens Austria AG in Vienna. She added that the shareholders also voted to increase the company’s authorized capital in order to pave the way for an eventual "last-minute investor."

"The decision to shut down the entire company was a bit surprising," said Valery Krylov, Red-Stars.com's country manager for Russia and acting general director of the Skate financial news service, in which Red-Stars.com holds a 75 percent stake. "But the decision to close the company's Moscow office was made several weeks before."

According to Krylov, the Red-Stars Moscow office was involved in conducting marketing research and facilitating information exchange between the company's three main investment projects – Skate, the Actis Systems e-business solutions provider and the Promo.ru Web advertising and PR agency. "The Moscow office would have been necessary only if the company were looking for more projects to invest in," Krylov said.

Red-Stars.com owns 51 percent of Promo.ru and an undisclosed stake in Actis, which the company said is bigger than a blocking share but smaller than a controlling share. Red-Stars.com also invested an unspecified amount in the medical Internet site remedicus.ru, which closed down a few months ago after being online for less than a year.

Unlike the other Red-Stars.com programs in Russia, which were well-established companies at the time of investment, remedicus.ru was a startup and required further investment, Krylov said. "Red-Stars.com has allocated all the funds that were originally specified," he said, adding that project management was informed of the stopping of funding in advance but failed to find new funding.

According to an early 2000 press report, Red-Stars.com planned to invest at least $18 million in Internet-related projects in Central and Eastern Europe, with about 40 percent of that earmarked for Russia. Exact investment figures for any of the company's Russian projects have never been made public, but Red-Stars.com said they were substantial. "As I view it, the amount was significant," Krylov said.

The company also announced plans to go public in 2001, but industry observers speculated that the worldwide slump in technology-related equities might have led officials to give up on the Red-Stars project.

However, the firm's closure is unlikely to undermine the operations of the Russian companies in which it has invested, although it might hamper future growth for some, officials said.

"Red-stars.com did not consider any further investment in our company," said Anna Sverdlova, executive director of Actis Systems. "And its closure will have no impact on us, since it did not have anything to do with our day-to-day operations, being just a minority shareholder."

Andrei Golovin, president of Promo.ru, said the firm was not badly affected by the closure and would look for a new partner to support its Eastern and Central Europe projects, while Krylov said Skate could support its own Russian operations but would also need another investor for outside projects.