Putin Calls for Domestic IPOs

RIA Novosti, 27.03.2012
MOSCOW, March 27 (RIA Novosti) – The Russian Prime Minister Vladimir Putin deems it necessary to engage Russian companies in holding initial public offerings (IPOs) on the domestic market.

During a meeting with the CEO of the Russian Direct Investment Fund (RDIF) Kirill Dmitriev, the head of government congratulated Mr. Dmitriev on the successful launch of RDIF, which brought EBRD, the respectable international organization, into its first transaction of investing in the equity of the MICEX-RTS exchange. EBRD and RDIF acquired 6.29% and 1.25%, respectively, in the combined exchange.

“As your fund has invested a lot during the merger of the two stock exchanges, I think now it is time to take the next step. You should work with our businesses that are planning to sell their shares to the public. It is important to float these IPOs primarily on the Russian market”, Putin said.

“More and more companies that we want as co-investors are planning to sell their shares in Russia because they see opportunities for accumulating long-term capital here. Our stock exchanges have gone up so much in value because more and more companies want to float their shares in Russia”, Dmitriev said.

RDIF was established by the state in June 2011 with the purpose to invest in leading companies operating in the fastest growing sectors of the economy, both in Russia and abroad. RDIF is intended to act as a co-investor to largest private equity funds, sovereign wealth funds, strategic and other financial investors, thereby attracting foreign investment in Russia. Within the next five years, the Russian government will contribute USD10 billion to the Fund, with an initial contribution of USD2 billion already made.

"We have made our first investment into the MICEX-RTS stock exchange. We wanted to show that investors have faith in the Russian financial market. We also involved the European Bank for Reconstruction and Development, our important co-investor, before the stock exchange IPO”, Dmitriev said.

The integrated stock exchange may hold an IPO in the fourth quarter of 2012 or in the first quarter of 2013, if market conditions are favorable

Dmitriev noted that the Fund’s second transaction was one of the biggest in the power industry. As part of the transaction, a consortium of investors including RDIF, Xenon Capital Partners' Rusenergo Fund and the Macquarie Renaissance Infrastructure Fund (MRIF), acquired a 26.43% stake in OGK-5 from Inter RAO UES paying USD625 million, of which nearly USD 140 million came from RDIF.

“We worked actively towards the formation of the Fund, and, as you have noted, have already invested a billion dollars, of which $200 million came from our fund and $800 million from our partners, our co-investors… The main principle of our Fund is that we invest our money when we receive at least the same amount from our co-investors. This allows us to attract investment to Russia and make the right decisions”, Dmitriev said commenting on the Fund’s first two transactions.

He said that one of the leading sovereign funds in the Middle East had expressed interest in investing in all RDIF transactions as part of an automatic co-investment model. Last year, RDIF already signed an agreement with China Investment Corporation to invest one billion dollars.

Putin recalled the May 2011 meeting with heads of the world's largest investment funds managing over two trillion dollars in total, and offered to invite them to the next meeting in St. Petersburg during SPIEF 2012.

“All of them are ready to come to this forum and would very much like to meet with you if you have the time”, Dmitriev said.