CIC commits $1b to Russian sovereign wealth fund
China Investment Corp. (CIC) will invest $1 billion in a joint Russia-China Investment Fund that will operate in partnership with the Russian Direct Investment Fund (RDIF), Moscow’s debut sovereign wealth fund.
Vladimir Dmitriev said that the RDIF would also commit $1 billion to the new fund, which will have an investment horizon of seven years, Reuters reported. It will seek outside investments four times the original capital commitments from the Chinese and Russian sides.
Dmitriev added that the Russia-China Investment Fund is intended to operate in a manner "that will strengthen Russia-China business relations." At least 70% of its corpus will be used to finance projects in Russia, Kazakhstan and Belarus, with the remainder deployed in China.
CIC's pledge is the first from an external party to invest with the RDIF, which was launched in January and will receive $10 billion in government funding over the next five years. The RDIF's stated purpose is to attract foreign investment amid efforts to deepen capital markets and help Russia diversify its economy, which is highly dependent on oil, natural gas and metals exports.
The fund is supposed to secure an equal contribution from a co-investor for each deal it makes, with a view to acting as a catalyst for the direct investment into Russia. As such, it plans to attract $50 billion in co-investment from foreign buyout firms, sovereign wealth funds and companies seeking to expand in the country.
The RDIF last month unveiled its international advisory board, which includes the chairmen of China Investment Corp. (CIC) and Korea Investment Corp. (KIC), the managing director of Kuwait Investment Authority (KIA), and the heads of several leading global buyout firms. The fund has also assembled its core management team with the appointment of five directors, a legal counsel and an adviser.
Dmitriev earlier said that the RDIF is currently working on 20 deals, worth a collective $5 billion, and expects to complete a set of transactions by early next year.
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