Prime Minister Vladimir Putin meets with Russian Direct Investment Fund CEO Kirill Dmitriev

, 27.03.2012

Transcript of the beginning of the meeting:

V.Putin: Kirill Aleksandrovich, as I understand it, the Fund has just recently launched its official operations and was registered in January?

K. Dmitriev: Yes.

V. Putin: And you have already done your first transactions totaling USD1 billion, so it is a successful start, congratulations.

K. Dmitriev: Thank you, Vladimir Vladimirovich.

V. Putin: How is the work going with your international fund partners? Last year, we met with them here, in Moscow. The mood on the whole was lively and positive. Most importantly, how is work going with potential direct investments, with potential partners in this area?

K. Dmitriev: Vladimir Vladimirovich, thank you for the opportunity to briefly present the first results of the Russian Direct Investment Fund following on from your meeting on May 18 last year with investors managing funds worth over two trillion dollars.

We have taken active steps in establishing the Fund and, as you said, we have invested one billion dollars, of which RDIF contributed USD200 million, while the remaining USD 800 million came from our partners, co-investors. It is very important that investors have been actively investing in Russia.

The Fund’s main principle is that we make investments which are at a minimum matched by the same amount of money coming from co-investors. This enables investment to be attracted into Russia together with the assurance of high-quality investment decisions because the decisions are made by us and by co-investors.

In a very short time, we have created what took many countries years to achieve. We have quickly established a professional team. Our International Advisory Board features leading international investors, such as the heads of the sovereign wealth funds of China, Korea and Kuwait, stars of the investment industry such as Leon Black, David Bonderman, and Martin Halusa the head of Apax. We do not pay them anything, and the fact that they joined our Advisory Board shows their interest in Russia and their conviction in Russia’s growth. They are attracted, for example, by the Russian middle class tripling in size over the past five years.

We have just travelled around Russia’s regions with investors. They are very interested in Russia’s regional growth prospects. So briefly, we are working very hard. Importantly, we have also entered into an agreement with the investment fund of China to invest one billion dollars. I have just completed a visit with Vladimir Dmitriev (the head of Vnesheconombank) to the Middle East, where one of the region’s leading sovereign wealth funds wants to invest in all RDIF transactions, along the automatic co-investment model.

V. Putin: Co-investing with the Fund.

K. Dmitriev: Yes, and entering into all of the Fund’s transactions, which is quite unprecedented. For them, this investment will be the largest single investment into a fund, and we are talking about a rather large sovereign fund.

I would like to talk briefly about our transactions. We made our first investment in the combined MICEX- RTS exchange, showing that investors believe in the Russian financial market, and attracting a significant co-investor – the EBRD – (European Bank for Reconstruction and Development) before the exchange makes its IPO. The second deal was one of the largest transactions in the power market: a USD625 million investment in OGK-5 (OAO Enel OGK-5), of which USD140 million came from us, and the rest from co-investors. The proceeds went to Inter RAO to fund its investment programme. This was a milestone, important transaction.

V. Putin: How much went to Inter RAO?

K. Dmitriev: USD 625 million. All the funds will be spent on their investment programme. The third deal, where we have signed a preliminary agreement, is also very interesting as it is an investment into the healthcare sector. We have signed a preliminary agreement with a leading fund which is the world’s largest healthcare investor and who wants to invest in the Russian private healthcare sector. All the proceeds will go to develop clinics and improve the quality of medical care. So we work in many industries bringing with us the "smart" money, the money of those who really believe in Russia. We are also looking at some opportunities abroad, as there is a crisis in Europe currently, and asset prices have fallen very significantly. For example, together with the United Aircraft Corporation, we are looking into certain specific investments in Europe, which may be of interest for Russia strategically.

In concluding this brief report, I would like to say that we are working hard and that we see investors who do believe in Russia’s growth prospects. They also see stability continuing after the elections in Russia. For them, it was important that the elections were successful, and they are now actively seeking to invest more resources in the Russian economy.

V. Putin: Once again, I want to congratulate you on a successful start. Due to the fact that the Russian Direct Investment Fund has, in effect, put a lot of money into the merger of the two exchanges, I think that here the following step now needs to be taken. We need to work with our businesses, which are about to IPO, so that their IPOs are placed, first of all, in the Russian markets.

K. Dmitriev: Yes, absolutely. More and more companies, in which we seek to invest, want to float their shares on the Russian exchanges seeing sources of long-term capital emerging. So really, we see that exchanges have greatly increased in price, as more and more companies seek domestic placements.

V. Putin: I have another suggestion. Last May, as you have recalled, we met with the heads of the world's largest investment funds. This dialogue must continue. Please invite them for another such meeting now in St. Petersburg, during the St. Petersburg Economic Forum.

K. Dmitriev: Vladimir Vladimirovich, we will do this for sure and we have already discussed it with them. Most are ready to come to the St.Petersburg forum and would very much like to have the opportunity to meet you, that’s for sure ... Leon Black met with you in Sochi; they have very warm relations towards Russia and would be very grateful for such an opportunity.

V. Putin: Agreed. Thank you