Russian fund scouts for Qatari investors

The Peninsula, by Satish Kanady, 02.08.2012

DOHA: Russia’s government-sponsored private equity fund is increasingly focusing on the Gulf region. After closing a $500m co-investment deal with the Kuwait Investment Authority (KIA), the $10bn Russian Direct Investment Fund (RDIF) is looking to attract Qatari investors.

“Qatar is one of the largest and most respected economies in the world and it is trying to diversify in a huge way and making massive international expansions. RDIF can offer some great opportunities for Qatari investors in Russia”, Kirill Dmitriev (pictured), Chief Executive Officer, RDFI, told The Peninsula yesterday.

The RDIF was established by the Russian government to make equity investments primarily in the Russian economy. In all of its investments, the Fund is mandated to co-invest alongside some of the largest and most sophisticated investors globally — thus acting as a catalyst for direct investment in Russia. Co-investing with the RDIF offers international investors a good opportunity to invest in an economy that is growing faster than developed economies.

Created in 2011 under the leadership of President Dmitry Medvedev and Prime Minister Vladimir Putin, who have since swapped places, the Fund is managed by a highly qualified team of private equity investors with broad international and Russian experience.

Dmitriev said the Fund is basically looking at a two-way opportunity. There are great investment opportunities in Russia’s health care, agriculture, infrastructure and gas sectors. We are interested in investing Qatari projects as well, he said.

Russia’s middle class has grown three-fold in the last five years. With the rising middle class looking for quality private sector medical care, this sector is set for dramatic growth.

Logistics is another key emerging sector which is looking for international investors. Russia’s trade with China has seen an exponential growth over the past couple of years. The volume of the bilateral trade is se t to cross $200bn by 2015. This means Russia needs huge investments in rails, logistic terminals and ports, Dmitriev said.

Agriculture is another potential sector for international investors. Qatar is already working on its ambitious food security programme. Russia is able to support the Qatari programme in a great way.

Clean energy is another key sector where we are looking potential investors. Russia is set to substitute traditional energy capacities with the renewable.

Russian economy is growing faster than that of those of the developed countries. It has got a great investment climate. Private Equity has historical returns in Russia.

It is much higher than any other European country. Russia’s debt against the GDP is just 11 percent. The budget is much balanced. Unemployment rate is 5 percent compared to over 10 percent of some of the most advanced countries, Dmitriev said.

Ensuring good returns to the investors is RDIF’s key priority. “We only look at projects that give returns. RDIF gives downside protection guarantee for the investors. In the electricity sector we are giving 18 percent downside protection”.

RDIF is looking to invest in 41 different projects in the next five to six years. It has in the pipeline to boost the volume of the fund from the existing $10bn to $50bn over the next five years.

The Peninsula