The firm, which is backed by Middle East institutional investors, has invested $175m in the $625m transaction, with a similar amount coming from Xenon Capital’s Rusenergo fund.
State-backed Russian Direct Investment Fund (RDIF) completed its second deal by co-investing $137.5m, the same amount as final partner Macquarie Renaissance Infrastructure Fund.
The total value of the deal could rise to $750m if target IRRs of 18 per cent are passed.
The deal will allow Russian state-controlled power company Inter Rao to rid itself of its unwanted stake in the business and reinvest the money in generating assets in its home country.
InterRao, which was given the stake by the Russian government via a capital hike last year, will also receive a carried interest of 20 per cent of the profits earned by the investors.
AGC co-CEO Walid Abu-Suud said, “We are delighted to be executing our first transaction in Russia, a high-growth market with under-tapped investment potential.
“The opportunity to co-invest alongside Russia’s new sovereign private equity vehicle RDIF and other distinguished investors gave us additional confidence as we pursued a stake in this world-class energy asset.”
As well as being the largest Middle Eastern investment in Russia, the transaction represents the largest-ever private equity deal in the Russian power sector.
The consortium of investors becomes a partner of the controlling shareholder, Italian energy company Enel, which holds 56.43 per cent.
RDIF chief executive Kirill Dmitriev said, “We are delighted to welcome leading Middle East investment firm AGC Equity Partners to our consortium as we close this landmark transaction.
“This consortium of private equity investors has acquired a blocking stake in the premium asset of the Russian power sector at an attractive valuation.
“The transaction represents a strong vote of confidence from leading international investors for the Russian utilities industry.”
RDIF, a $10bn vehicle launched by the Kremlin in mid-2011, was created to entice overseas investors to commit to private business opportunities in the country.
It had previously entered a $300m deal with the European Bank for Reconstruction and Development to buy a 7.5 per cent stake in Moscow’s MICEX-RTS stock exchange.
The fund will receive $2bn each year in government capital for the next five years, and hopes to generate around $50bn over the next five to seven years.
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