Exclusive: RDIF, KIA to bid for $4.6bn Russian road

The investment will be funded by a $1bn ‘automatic’ co-investment platform the Kuwaiti sovereign wealth fund just agreed to double in size.

The Russian Direct Investment Fund (RDIF) and the Kuwait Investment Authority (KIA) are planning to bid for Russia's RUB300 billion (€4.3 billion; $4.6 billion) Central Ring Road project, Infrastructure Investor has learnt.

The scheme is part of a number of deals being considered by both sovereign wealth funds as they seek to deploy a co-investment pool set up in 2012 with an initial $500 million from KIA.

The vehicle, to which the institution agreed to commit another $500 million today, sees it automatically co-invest alongside RDIF in every asset backed by the Russian fund. KIA has already invested in about 20 RDIF projects across a number of industries and is one of a number of institutions backing a scheme to enhance Russia's broadband network.

Both funds are now considering a number of projects in sectors such as healthcare, agriculture and infrastructure, a spokesperson for RDIF told Infrastructure Investor. These include several port and road investments.

The Central Ring Road project, which was first mooted in 2001, calls for the construction of 339 kilometres of high-speed road in the vicinity of Moscow. Half of it is to be financed by Russia's National Welfare Fund (NWF), another state-backed fund, with the balance coming from the federal budget and private parties in a roughly equal split.

The money provided by NWF is to be invested in bonds issued by Avtodor, a state-owned company in charge of building toll roads. The securities have a yield of inflation plus 1 percent and a maximum maturity of 28 years, the Economy Ministry said when RDIF first put its weight behind the project.

The road is scheduled to be complete by 2018, after which Russia intends to make it part of a pan-European network linking London to China.