Fundraising

RDIF in $237m telecom deal

The deal comes as the state-backed Russian Direct Investment Fund believes growth in the Russian economy means it’s the right time to invest in the telecom sector.

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The Russian Direct Investment Fund (RDIF) has teamed up with Germany’s Deutsche Bank to invest in Rostelecom, Russia’s largest telecommunications company, which is listed on the Moscow Interbank Currency Exchange (MICEX).

The pair will invest a total of $237.1 million which will be equally split, according to a statement. As a result of the transaction, RDIF and Deutsche Bank will together acquire 72 million Rostelecom shares from its subsidiary company MOBITEL.

RDIF and Deutsche Bank plan to “further develop and strengthen the company’s market position”, it said.

Rostelecom provides telecom services across all parts of the sector throughout Russia. The business has 9.5 million broadband services subscribers and more than 6.8 million users of Rostelecom pay TV. It currently has 13.6 million mobile subscribers.

It is the “right time” to invest in the telecom sector, RDIF said. “Sustained growth in the Russian economy means demand among consumers and businesses for reliable and ultra-fast broadband will continue to increase. This deal will be another important step in realising Russia’s infrastructure potential,” Kirill Dmitriev, chief executive of the Russian Direct Investment Fund, said in the statement.

The Russian Direct Investment Fund is a $10 billion fund which was set up by the Russian government in 2011 to invest in Russia. Since inception the fund has invested $3 billion into Russian companies, of which $750 million was invested by RDIF and over $2 billion came from international co-investors, RDIF said.

RDIF has been relatively busy in recent months. In June, RDIF teamed up with a consortium including Titan International and One Equity Partners (OEP) to invest in Voltyre-Prom, a Russian agricultural and industrial tire manufacturer. In June, RDIF also launched a joint venture with General Electric for the construction of mini power plants for manufacturing companies in Russia.

In the same month, RDIF teamed up with Abu Dhabi sovereign wealth fund Mubadala Development Company to launch a $2 billion co-investment fund which targets investments in Russia. In February, RDIF invested in the initial public offering of the Moscow Exchange.