Russian fund taps China and Middle East

Financial Times, 27.03.2014

Russia’s $10bn state-backed fund has tapped Chinese and Middle Eastern sovereign wealth fund money in a bid to show it can attract foreign capital into the country even if US and European investors turn away following the annexation of Crimea.

Russian Direct Investment Fund, which was set up by President Vladimir Putin three years ago and which counts Blackstone chief executive Stephen Schwarzman, Apollo’s co-founder Leon Black and Apax’s boss Martin Halusa on its international advisory board, is leading the purchase of a $200m stake in Sodrugestvo, a large oilseed processor and trader, alongside sovereign wealth funds including China Investment Corp.

Kirill Dmitriev, who runs the RDIF, said that the fund, which includes former IMF boss Dominique Strauss-Kahn on its supervisory board, relies on China and the Middle East for about 90 per cent of the foreign capital committed to its platform.

“Obviously, what we see now, is that US and European investors are slowing down their investment pace. I expect we’ll do many more deals with Chinese and Middle Eastern investors going forward,” Mr Dmitriev said. “But we have significant hope of de-escalation going forward.”

In the past three years, Mr Dmitriev has signed a raft of partnerships with sovereign wealth funds in Asia and the Middle East, including Abu Dhabi, Mubadala and Kuwait Investment Authority to invest in companies and infrastructure projects in Russia. He also set up a joint fund with CIC.

In July, Mr Dmitriev, a former Goldman Sachs banker, announced the appointment of Ahmad Mohamed Al-Sayed, the chief executive of the Qatar Investment Authority, to RDIF’s international advisory board, heralding a possible collaboration with Qatar.