The Russian Direct Investment Fund Launches New Fund

Opalesque, 22.06.2013

Bailey McCann, Private Equity Strategies

In February we spoke with Sean Glodek, Director, Russian Direct Investment Fund (RDIF) on the success of the MICEX IPO. Which created Moscow’s first publically traded exchange. Now is out with more news and a new fund launch.

RDIF and Mubadala Development Company (Mubadala), the Abu Dhabibased investment and development company are joining on a $2bn co-investment fund to pursue opportunities in Russia. The agreement was announced at the St Petersburg International Economic Forum 2013 by CEO of RDIF Kirill Dmitriev and CEO of Mubadala Khaldoon Al Mubarak.

The fund will predominantly focus on long-term investment opportunities across a range of industry sectors, acting as a catalyst for direct investment in Russia. The announcement is aligned with Mubadala’s plans to establish a strong presence in key international markets.

Mubadala and RDIF are each committing $1 billion. The majority of Mubadala's commitment will be deployed in opportunities that will be evaluated on a deal-by-deal basis while some of the capital will be invested as an automatic co-investment into RDIF deals.

Some early indications of what the new fund may look at were also offered at the event. Dmitriev who is also Chairman of the B20 Taskforce on “Investment and Infrastructure” finalized recommendations on infrastructure investments in the country and had this to say on those opportunities - "the key objective of our recommendations is to create the optimal conditions for global economic growth by promoting investment, especially in infrastructure. Approximately $60 trillion of global investments into infrastructure will be required in the run up to 2030. This represents more than the value of all the existing infrastructure today. The introduction of international best practices in infrastructure development would save up to $1 trillion per year, enabling world GDP to grow by at least 3% if these savings were re-invested."

Those recommendations are focused on improving the quality and return of infrastructure investments as well as making it easier to invest in infrastructure. The B20 will be included in broader discussions of global infrastructure investment at the G20 meetings.

RFID made two additional announcements today of memoranda of understanding with General Electric (GE) and OJSC Russian Grids to expand electrical and power grid capabilities within the country. RFID hopes to work with OJSC Russian Grids to attract investment into the Russian power industry and will work with GE on providing cogeneration power to the commercial sectors of Russia’s economy.