Russia's SWF eyes more tie-ups with Singapore investors

Business Times Singapore, 20.11.2017

ONE could well describe the Russian Direct Investment Fund (RDIF) as a sort of sovereign wealth fund (SWF) in reverse.

While many SWFs around the world invest abroad primarily, the raison d'etre of the six-year-old RDIF is to attract foreign capital to invest in Russian projects, with the aim of lowering the risk for foreign funds as they are partnering with the state.

The RDIF has a total of US$40 billion under management - US$10 billion from the Russian government to kick-start the fund in 2011, and the rest from its many joint partnerships that have been committed to date.

RDIFhas more than 20 major partnerships, including one with China Investment Corporation to create a US$2 billion Russia-China Investment Fund, of which 70 per cent will be invested in Russia.

There is also a deal with the Japan Bank for International Cooperation to have each entity invest US$500 million for various joint investments.

RDIF's charismatic chief executive officer, the 42-year-old Kirill Dmitriev, is part of the fund's nine-member supervisory board.

The board's other members include Russia's Finance Minister Anton Siluanov, the country's central bank governor Elvira Nabiullina and former International Monetary Fund managing director Dominique Strauss-Kahn.

Mr Dmitriev, a Harvard and Stanford-educated former Goldman Sachs banker who has been with the fund since day one, has been busy jetting around the globe to attract more strategic partners to do business in Russia.

He was in the Vietnamese coastal city of Danang earlier this month to attend the Asia-Pacific Economic Cooperation's (Apec) business advisory council meetings.

He later spent several days in Singapore for a series of meetings with potential investors and existing partners.

When The Business Times met him at his hotel in Danang after the Apec meetings, Mr Dmitriev spoke of how the focus at RDIF is not just on bringing in the money, but getting the necessary expertise on board that can benefit Russian industries.

He cites the Vladivostok International Airport as a prime example.

Last year, an agreement was signed between Changi Airports International (CAI), Russian investment firm Basic Element and RDIF. Under the deal, CAI and its partners invest, manage and operate the airport.

"Vladivostok is our hub for the Russian Far East, and we want to open the area up to more tourists and business travel," said Mr Dmitriev. International traffic to that airport in 2017 grew by 40 per cent year-on-year.

"While we value the funds coming from Changi, what we value even more is Changi's expertise. We want to have these world-class operators and top companies and airlines work with Russia."

Mr Dmitrievalso said RDIF has begun discussions with Singapore's Olam International, and he hopes to finalise an agreement with the agri-trader before too long.

"We are constantly seeking top efficient Singapore companies such as Changi and Olam, that will be able to have a strong partner to help them invest in Russia and take advantage of our growing markets," he said.

Mr Dmitrievsingled out agriculture, technology and infrastructure as among the sectors where he hopes more foreign investors, including those from Singapore, can consider investing in.

He described the political and business relationship between Russia and Singapore as strong and committed.

At the government level, there is a High-Level Russia-Singapore Inter-Governmental Commission that meets regularly and is co-chaired by Russia's First Deputy Prime Minister Igor Shuvalov and Singapore's Deputy Prime Minister Tharman Shanmugaratnam.

Many Singapore and Russia companies also participate in a bilateral business forum every year. The most recent event in Moscow in October had a focus on smart cities and urban solutions.

"We appreciate the model that Singapore has built over the years, which is one of meritocracy, efficiency, analytical decision-making, and strong advances in technology," said Mr Dmitriev.

"We would like to apply all these things, and more, to the Russian economy. And if we can do this properly, we can make Russian companies more efficient and unleash lots of value for them," he added.