Russian Renewal: RDIF Makes Strides with International Institutional Investors

Sovereign Wealth Fund Institute, 28.05.2014

The second to last week of May was momentous for countries in Eastern Europe and Central Asia. The St.Petersburg International Economic Forum was hosted on May 22-24 in Russia. During the conference, the Russian Direct Investment Fund (RDIF) highlighted some significant recent deals and joint ventures. In a continuous strategy to expand foreign investment from non-Western nations, Russia has courted East Asian and Gulf countries. Through money moves and conference speeches, Russia is making a case for institutional investors not to ignore one of the top eight largest economies in the world. For example, the Qatar Investment Authority (QIA) is going to invest US$2 billion in Russia through joint investments with the RDIF. In recent times, the RDIF has attracted a slurry of sovereign wealth investors such as Mubadala, the Kuwait Investment Authority, China Investment Corporation, Mumtalakat Holdings, Fondo Strategico Italiano, Korea Investment Corporation and the Abu Dhabi Department of Finance.

The RDIF and Macquarie Russia & CIS Infrastructure Fund (MRIF) signed a MoU to develop a “smart grid” program alongside a Russian power transmission and distribution company, JSC Russian Grids.

May 21st saw the announcement of a landmark deal between Russia and China, in which Russia agreed to a 30-year gas supply contract to China. The Gazprom deal is worth US$400 billion. Gazprom generates nearly 80% of its revenue from Europe. This deal will influence the global gas market. Gazprom still needs to build a pipeline to carry 38 billion cubic meters of gas annually to China.

RDIF and Institutional Investor Deal – Buying Ust-Luga LPG Port

A group of investors including the RDIF and Gazprombank have agreed to invest in a liquefied petroleum gas (LPG) and light oil products transshipment terminal. The terminal is owned by Russian gas processor SIBUR and located in the sea port of Ust-Luga on the Baltic Sea.