RDIF CEO: Russia Sees Investment Inflow after Elections

RosBusinessConsulting, 19.03.2012

Russia is seeing new investment stirring in the wake of this year's presidential elections, Kirill Dmitriev, the Chief Executive of the RDIF (Russian Direct Investment Fund), has told RBC. Mr Dmitriev commented on the acquisition of 26.43% in Enel OGK-5 by an investor consortium including the RDIF, Rusenergo Fund (managed by Xenon Capital Partners), and Macquarie Renaissance, an infrastructure-focused investment fund.

“The deal is proof of significant growth in international interest toward investments in the Russian economy, especially following the presidential elections,Dmitriev stated. He went on to say that the deal “is mutually beneficial for all participants. The RDIF and the consortium of co-investors will acquire a share in the premium asset of the Russian power sector.”

The deal, which saw the investor consortium buy 26.43% in Enel OGK-5, was approved by Inter RAO UES’s Board of Directors on 15 March 2012. The transaction has enabled the RDIF, a wholly-owned subsidiary of Vnesheconombank, to attract more than $3.5 of co-investment for each dollar of its own invested capital.

Industry experts share Dmitriev’s opinion. “As far as Iam aware, the proceeds will be used to finance Inter RAO’s investment programme, which makes the deal look reasonable from every perspective,” said Dmitry Gerkusov of Uralsib Capital. He added that this is a successful investment project for the RDIF, especiallyin light of the asset’s valuation.

The investor consortium is to partner with Enel, an Italian company and a global power market leader. The company strives to ensure sustainable development, improved reliability and operational excellence for its Russian assets, driving upgrading efforts across the electricity sector, a key area for the Russian economy.

“The deal highlights the considerable interest that major investors from both Russia and abroad show in the industry,” commented Oleg Tsarkov, Managing Partner at Svarog Capital Advisor. “Although formed as recently as mid-2011, the fund is already in its second deal, raising funds from leading investors to appropriately finance an industry so crucial to the national economy.”

This unprecedented deal in the Russian power market may signal heavier flows of foreign investment into Russia. At a meeting with Prime Minister Vladimir Putin, Russian Minister of Economic Development Elvira Nabiullina said that foreign investment is set to grow continuously over the next two to three years following Russia’s accession to the WTO, which will contribute significantly to eliminating barriers for exporters while also creating a more attractive environment for foreign investors.