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China, Russia confirm plans for $4bn investment fund

30 Apr 2012

Russia and China have confirmed plans to create an investment fund worth up to $4bn, which will comprise a $1bn contribution from the $10bn investment vehicle launched by the Kremlin in September last year.

The newly formed Russian-Chinese Investment Fund (RCIF) will be pooled from the Russian Direct Investment Fund (RDIF) and China Investment Corporation (CIC), the country’s $410bn sovereign wealth fund.

Progress on the fund was announced at an economic forum attended by Chinese vice prime minister Li Keqiang and Igor Shuvalov, the first deputy of Russian Prime Minister Vladimir Putin.

“The creation of the Russian-Chinese investment fund by the Russian Direct Investment Fund and China Investment Corporation will become an example of effective cooperation in the economic sphere between Russia and China,” said Kirill Dmitriyev, general director of the RDIF.

The two parties will each contribute $1bn to the joint venture, while the remaining capital will be sourced from outside investors over the next 12 months. The terms of the agreement state that no less than 70 per cent of the capital must be invested in Russia or the CIS.

The fund will become operational by the end of June this year.

Sectors that are likely to be targeted for investment include machine-building, agriculture, transportation, and timber processing. Seventy per cent of resources will be directed to Russia and 30 per cent to China.

The RDIF was last year primarily to entice foreign investors who would normally be wary of investing in private circles in Russia. The fund will co-invest with private equity and sovereign wealth funds amongst other strategic investors.

The RDIF  is currently working on a pipeline of about 40 projects, director Richard Ogdon told AltAssets in an interview earlier this year.

 

Copyright © 2012 AltAssets

 

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