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RDIF-Avtodor to co-invest in transport

Russia’s sovereign wealth fund and state-owned Russian highways firm Avtodor have formed a transport-focused partnership.

Moscow-based sovereign wealth fund, Russian Direct Investment Fund (RDIF), has signed an agreement to design and implement joint venture transport investments with state company Russian Highways (Avtodor).

The two firms will co-invest in projects at an early stage of development under state control and then subsequently seek to attract leading infrastructure investors, according to a statement. The firms believe the partnership will allow a “significant increase” in the construction of new roads in Russia.

RDIF and its international partners will provide at least 25 percent of the equity financing for projects along with the expertise required at the implementation stage. The partnership will seek to attract foreign investment into joint projects through mechanisms including co-investment by the National Wealth Fund.

The statement said RDIF/Avtodor’s first project could be the refurbishment of the M-4 Don Highway for subsequent operation as a toll road. The highway links Moscow, Voronezh, Roznov-na-Donu and Krasnodar.

“Demand for equity investments into state-sponsored transport projects over the next five years will exceed 200 billion roubles, which requires participation of foreign investors,” said Kirill Dmitriev, chief executive officer of RDIF, in the statement.

“This partnership will enable us to efficiently implement transport infrastructure projects, while making them considerably more attractive to RDIF’s partners. This will subsequently accelerate the rate of road construction in Russia.”

RDIF was formed in June 2011 to make equity co-investments primarily in Russia alongside international financial and strategic investors. Avtodor was established in 2009 with a mission to form and develop Russia’s national high-speed highway network.