Kremlin private equity fund RDIF nets first investment


The EBRD and Russian Direct Investment Fund (RDIF) are set to buy a minority stake in MICEX-RTS, Russia’s largest stock exchange, marking the Kremlin sovereign wealth fund’s first investment and reflecting the state’s efforts to transform Moscow into a globally competitive financial hub.

Russia’s stock market is the most developed in the Commonwealth of Independent States (CIS), and represents the largest trading venue for futures and options in Eastern Europe.

The EBRD and RDIF bought a 6.29 per cent and 1.25 per cent stake respectively in the Moscow-based bourse as part of a long-term strategy to promote the development of local capital markets in Russia and broaden the regional and international appeal of the recently unified exchange.

This is the first time the EBRD has invested in a trading exchange in one of its 29 countries of operation. Its stake will give the bank the right to nominate a candidate for election to its 19-strong board of directors, a body which determines the exchange’s development strategy and agrees listing and reporting standards.

EBRD’s Varel Freeman said, “The turmoil in the world economy gives added urgency to the need to strengthen and deepen Russia’s capital markets so that they can provide the liquidity which the domestic economy needs to access and the creation of a unified exchange represents an important milestone in that process.”

“Through this investment, the EBRD hopes to contribute to increasing the attractiveness of MICEX-RTS so that it becomes the preferred exchange for Russian issuers and traders, as well as investors with an appetite for Russian stocks and other financial instruments.”

Kirill Dmitriev, CEO of the RDIF, added, “This transaction verifies RDIF’s core mission of attracting investment capital to support market-leading Russian companies. In addition, this investment is an important building block in strengthening Moscow as an international financial center. The RDIF can now fully leverage its extensive relationships with sovereign wealth funds and other leading investors to pursue additional pre-IPO investment in MICEX-RTS and to further improve its IPO prospects.”

The RDIF is a $10bn investment vehicle launched by the Kremlin six months ago to entice foreign investors who would normally be wary of investing in private circles in Russia into the Russian private equity space.

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