Ben Aris in Moscow -

Jim Rogers is not a complete stranger to Russia, having once driven across the entire country from Vladivostok to Helsinki in 1966. "I have seen more of Russia than most Russians," he blusters of the trip. But that doesn't mean he likes it. In 2003, Rogers famously got into an emailed duel with Dmitri Alimov, a Russian MBA student at Harvard Business School, where he enthusiastically rubbished Russia, saying he would never invest there.

That's why the announcement by Russian state-owned VTB Capital and the leading investment bank in the country that it had hired Rogers as an advisor to its new agricultural private equity fund was such a shock. Rogers has clearly had an epiphany and gushed about the exciting opportunities offered by Russia today in an exclusive interview with bne that runs pretty much diametrically opposed to the mainstream investor view of the country. But then that is a trait that made him a celebrity investor in the first place.

Rogers' claim to fame is that together with his partner, billionaire philanthropist George Soros, their Quantum Fund broke the Bank of England in 1992, forcing the UK out of the Exchange Rate Mechanism and making them super-rich in the process.

Soros must be partly responsible for Rogers' previous animosity toward Russia and he visited Moscow with him in 1997. The Hungarian-born Soros got caught up in the first wave of enthusiasm for Russia that saw the newly minted Russian stock market soar. At the peak of the bubble that year, Soros became the lead investor into the Mustcom consortium that paid $1.8bn for a 25% stake in Russia's fixed-line telephone monopolist Svyazinvest that year in the country's first big privatisation. The bubble bust a year later and Soros finally sold out of the stake in 2004, booking at least a $1.1bn loss. Soros later dubbed it "the worst investment of my life."

Food for thought

After that experience, Rogers was vocally down on all things Russian leading up to his famous exchange with Alimov, which was widely followed and ended up being written up by the New Yorker. So his new job with VTB is quite a turnabout. Rogers says there are several reasons for his change of heart, but as an established commodities investor Rogers points to Russia's agricultural potential as the most compelling reason. "Agriculture is going to be one of the best sectors for the next 20 to 30 years. Russia could and should be a great agricultural producer," says Rogers.

VTB's own team, headed by the CEO of VTB's private equity fund Tim Denchenko, will do the legwork of hunting out farms and firms to invest into; Rogers job is to advise on strategy and spot the trends that these investments will play on.

He has also been impressed by the rhetoric both in President Vladimir Putin's public speeches and the private meetings he has had with the president. "I listened to everything he had to say and I agree with much of it. There is concrete evidence of change and that is what has changed my view of Russia," says Rogers. "Russia seems to be changing and outsiders are welcome to invest capital and bring their experience to play. Russia will benefit from this change as will the rest of the world."

But most convincing of all is the fact that the Kremlin is putting its money where its mouth is. Rogers says the establishment of the Russian Direct Investment Fund, a massive state-backed $10bn private equity fund with the mandate to co-invest with the world's leading funds, is indicative of a new direction. "Putin and the government realise that they need to play by the same rules as everyone else. Now they will invest alongside and if you make money, they make money, and if you lose money, they will lose money. This has not happened before."

Image problems

Nevertheless, all these things seem to be very little to go on when set against Russia's atrocious investment image. But that is what ballsy investors are supposed to do: weigh the evidence and pick the point when the story changes. "I am delighted that Russia has a horrible investment image, as that means it is cheap. If it was going to be easy and everything was transparent, then it would be the same as investing into Germany," says Rogers. "If you were looking at China in 1978 and said the same things that are being said about Russia now, everyone would have laughed at you. But if you recognised the changes in China, then the problems become huge opportunities for the investor."

The international debt crisis is also contributing to catalysing the changes in a market like Russia, says Rogers, who knows a thing or two about governments with financial problems. As the only markets in the world showing any growth, emerging markets are moving from a risky punt to add something extra to a portfolio, to becoming a mainstream asset class. The worse things get in the West, the more investors will be forced to raise their allocations in the new world. "Many of the countries in the West are in decline and some of them will go bankrupt. Who are the strong countries in the world today, the biggest creditors? It's Taiwan, Japan, Singapore, Hong Kong and China. The West will have to take Russia more seriously as a result of this crisis," says Rogers, whose is bringing up his two daughters in both Chinese and English.

Still, Rogers is too long in the tooth to be completely swept away by the rhetoric and Russia has allowed its image to fester for too long for there not to remain some lingering doubts. "The process [of change] has just started. I have no idea what Putin's motivation is: perhaps he is worried about his place in history or simply that he has had a change of heart and is transforming from a former KGB colonel into an international statesman," says Rogers. "But Russia's development won't be a straight path - change on this scale never is - but either I am early or I am wrong about Russia. Ask me again in 15 years time and we will see."