RDIF seals renewable energy JV in Japan

The Russian government-backed fund has inked one of its first deals under the $1bn Russia-Japan infrastructure investment platform.

Russian Direct Investment Fund (RDIF), the $10 billion Russian government-backed investment vehicle, has teamed up with a Japanese energy alliance to promote and improve renewable energy technology in Russia, according to an RDIF statement.

The Japanese Business Alliance for Smart Energy Worldwide (JASE-W) came to Moscow to sign a memorandum of cooperation with RDIF just after Christmas. Both parties in the joint venture will be focusing primarily on investment opportunities in Russia in the sectors of renewable energy.

Although the financial size of the JASE-W transaction is still not set, it marks the first deal RDIF has completed out of its $1 billion platform with the Japan Bank for International Cooperation (JBIC). An RDIF spokeswoman told Infrastructure Investor that RDIF sees this deal as the consummation of their work with the bank, as well as “a continuation of our vision”.

The $1 billion Japan platform was announced in April, and the two parties have looked at a number of deals since then. The spokeswoman said that the platform is continuing to look at other projects, but declined to comment on when the next Russia-Japan deal might be announced. She admitted that closing deals would likely take some time due to necessary cross-border negotiations.

“Opportunities aimed at improvement of the Russian power generation companies' performance, as well as promote development of cogeneration, smart grids and waste-to-energy technology” will be top priority for the joint venture, according to the statement.

The hope, it continued, is that “advanced technologies will drive significant reduction of fuel consumption and guarantee stable output and supply of electric power and heat for end users.”

The new joint venture can also focus on business transactions in Russia’s far east, but all will be in the sectors of energy and power generation, particularly energy efficiency improvement.

RDIF was launched by the Russian government in 2011 to make equity investments, mainly in the Russian economy. It is mandated to attract co-investments from sophisticated global investors, making it a tool for direct investment into Russia.

To date, RDIF has formed eight partnerships with foreign investors or governments worldwide, including a $2 billion platform with China Investment Corporation, a $5 billion partnership with Abu Dhabi’s Department of Finance, and a €1 billion platform in Italy. All of these platforms have focused on private equity or infrastructure investment strategies.