Mubadala shows appetite for Russian deals

The National, 10.11.2016

Mubadala Development Company, the Abu Dhabi strategic investment company, said yesterday that it is weighing two investments for a total of up to US$300 million in Russia’s food sector.

The investment would be with the Russian Direct Investment Fund (RDIF), a Russian government-backed strategic fund with which Mubadala set up a $2 billion fund three years ago to make long-term investments across a range of industries in Russia, as well as with other unnamed investment funds.

The investments under consideration include one of up to 9bn roubles (Dh510 million) in AFG National, the result of a 2013 merger between AF Group, the country’s largest rice grower and distributor, and Angstrem, the largest packaged cereals company.

Also, an investment of up to 10bn roubles in EFKO Group, which makes fats for confectionery and baking and has a leading position in the Russian market for mayonnaise, vegetable oil and ketchup.

In a statement, RDIF said the funds would be used to expand land holdings and increase production, as well as for other infrastructure. EFKO would use the money to expand its markets in the former Soviet Union countries, as well as into the Middle East and Asia markets.

"Russian agriculture has huge development potential and is attractive to foreign investors due to the high growth rate in the domestic market and exports," said Kirill Dmitriev, RDIF’s chief executive, in a statement.

Mubadala and the Abu Dhabi government have been deepening ties with Russia in recent years.

In 2013, following a state visit by Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, commitments were made for joint strategic industrial investments worth billions of dollars.

Separately yesterday, Russia’s minister of industry and trade, Denis Manturov, was quoted by the Russian news agency Interfax, during a Russian-UAE intergovernmental commission, confirming the intention of Mubadala Petroleum and Rosneft, Russia’s largest oil company, to develop two oilfields in Siberia. Meanwhile, Russia has signed on to be one of the main suppliers of enriched uranium for the UAE’s nuclear power ­programme.

The Russian investment opportunities come at a time when the country is looking to expand its food sector and other industries to rely less on imports, especially those affected by sanctions related to the country’s involvement in the Ukrainian civil war.

"Asia and the Gulf region are the only potential investors we still have while Western investors hold back from investments for obvious reasons," ­Andrey Sizov, the head of ­SovEcon agriculture consultancy, told CNBC television in Moscow yesterday.