Russia state fund sees Middle East, Asia demand despite sanctions-CEO

Reuters, 19.11.2014

DOHA, Nov 20 (Reuters) - The Russian Direct Investment Fund (RDIF) is still attracting significant interest from investors in the Middle East and Asia despite sanctions putting off investment from the West, its chief executive said on Thursday.

Many Western firms have been paring back their activities in Russia after sanctions imposed by the United States and Europe over Moscow's role in the Ukraine crisis -- with the sanctions having a wider negative impact on Russia's economic outlook.

"Obviously, geopolitics has delayed some of the investment decisions by some of the U.S. investors," Kirill Dmitriev told Reuters on the sidelines of a finance conference.

"But we do see significant interest from Middle Eastern investors, from China and other Asian investors, who say, given the situation, can we in the long term make attractive investments in Russia and the answer, we believe, is yes."

Dmitriev pointed to the relatively low value which Russian firms were trading at -- many at a price-to-earnings (PE) ratio of around five times -- and the efficiencies which could be made in many businesses to boost earnings.

In contrast, the FTSE 100 index trades at an average multiple of 18 PE, while Qatar's benchmark is at 17 times.

The RDIF was set up in 2011 by the Russian government to encourage joint investments in the Russian economy from international investors and has brought in around $15 billion of capital since then. Of that, $7.3 billion has been deployed, of which $6 billion came from foreign investors, Dmitriev said.

Dmitriev believed there were attractive opportunities in a number of sectors, including agriculture, energy, outsourcing and healthcare -- which was benefiting from a five-year breaks from income and capital gains tax. (Editing by Martin Dokoupil/Keith Weir)