Russia's Main Stock Exchange Gets Investment From EBRD, State Fund

WSJ.com, 30.01.2012
MOSCOW --Russia's state-run direct investment fund will buy a stake in the country's MICEX-RTS stock exchange alongside the European Bank for Reconstruction and Development, a move aimed at boosting Moscow's status as a world financial center and bringing the exchange closer to an initial public offering.

The $10 billion Russian Direct Investment Fund, or RDIF, which was formed last year to attract foreign direct investment into Russia, will buy a 1.25% stake in the exchange, while the EBRD will take a 6.29% stake, according to a press release Monday.

A person close to to the matter said, the EBRD's stake was valued at around 8 billion rubles ($266 million). The Micex and RTS exchanges merged last year in a deal valued at $4.8 billion.

"This investment is an important building block in strengthening Moscow as an international financial center," Kirill Dmitriev, RDIF's chief executive, told Dow Jones Newswires in an interview. "This is a great time for us to invest. The economics of the merger are very solid and the synergies will provide value."

Russia has set a long-term goal of transforming Moscow into a world financial center, although officials have acknowledged that rampant corruption and sparse infrastructure will make the task a difficult one. Most top Russian companies have lately chosen to avoid Moscow's bourses when placing shares or raising debt, choosing instead more established markets like London.

Further pre-IPO investments in the exchange may come from sovereign wealth funds and other investors the RDIF has a relationship with, the fund said.

"We're already speaking with co-investors and have received a good deal of interest," Dmitriev said, adding that most potential co-investors were private equity funds.

The deal will also give the EBRD the right to nominate a candidate for the exchange's 19-person board of directors, which determines development strategy and agrees listing and reporting standards.