Russian Direct Investment, Mubadala Development Launching $2 Billion Investment Fund

Dow Jones, 21.06.2013

Russia's state-sponsored private equity fund said Thursday it is launching a $2 billion investment fund with Abu Dhabi's Mubadala Development Company.

The fund will focus on long-term direct investment in Russia across a range of industries, Mubadala and the Russian Direct Investment Fund said.

"Mubadala's experience and track record in multiple industry sectors will enable significant value creation in our co-investments, and will increase foreign direct investment from Abu Dhabi into Russia," said Kirill Dmitriev, chief executive of the RDIF.

"Given the track record and caliber of the RDIF team we are confident that our collaboration will deliver long-term financial returns and development opportunities," said Mubadala Chief Executive Khaldoon Al Mubarak.

Each side will commit $1 billion. The majority of Mubadala's commitment will be used for investments that will be evaluated on a deal-by-deal basis while some of the capital will be invested as co-investment into RDIF's other deals.

The deal is part of Mubadala's plans to establish a stronger presence in key international markets, the two sides said in a statement.
Earlier this year, the RDIF signed a similar $1 billion deal with the Japan Bank for International Cooperation.

The RDIF was created in 2011 to attract foreign private equity investment into Russia. It will be capitalized with $2 billion a year in state cash for five years for a total of $10 billion. Under its mandate, the RDIF is required to secure co-investment that at a minimum matches its own commitment.

Last year, the fund secured a commitment of $500 million for the Kuwait Investment Authority to co-invest in all RDIF deals. The RDIF and the China Investment Corp. (CIC.YY) also created a joint fund to invest in Russian private equity deals, with each side contributing $1 billion. (Lukas I. Alpert)