China, Russia sovereign funds invest in forestry firm

Russian Forest Product - which has operations in Siberia and accounts for 10% of Russia's timber exports to China - holds annual rights to fell more than 4.5 million cubic meters of timber and has long-term leases on 6.4 million hectares of forest. The transaction is expected to create about 1,000 jobs and enable the forestry company to sell processed wood instead of raw logs.

"There's a general understanding that it's important for Russia to develop good relations with countries of the east and to learn from them," said Kirill Dmitriev, CEO of RDIF, cited by the Financial Times. "Russia-Asian co-operation is going to be an increasing feature of the way the world works."

In April, Russia and China confirmed plans for the joint $4 billion investment fund, which will be backed by initial $1 billion contributions from their respective sovereign wealth vehicles. The remaining $2 billion is expected to be come from other Chinese institutional investors.

The vehicle is managed by a joint venture company, with RDIF and CIC controlling 60% and 40%, respectively.

Engineering, agriculture, forest and timber industries, transportation, and logistics are among the fund's target sectors. Special attention will also be given to energy efficiency and energy saving projects. It is expected to invest 70% of its corpus in Russia and up to 30% in China.

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• Topics
• Greater China
• Expansion
• Europe
• China
• Russia
• Outbound investment