Russia-Japan Investment Fund makes first deals

The $1bn joint vehicle co-invested with RDIF to spend nearly $170m on stakes in Russia’s Transneft and the EN+ Group.

The Russia-Japan Investment Fund, a joint vehicle between the Russian Direct Investment Fund and Japan Bank for International Cooperation, has made its first investments in energy infrastructure and industrial production.

The total amount of co-investment by RJIF and RDIF in the two transactions stands at more than 10 billion roubles ($169 million; €143 million).

The $1 billion joint fund invested in Transneft, a Russian oil pipeline operator which transports up to 85 percent of oil produced in Russia and 26 percent of all oil products from the country.

The RJIF is joining other investors in Transneft including the Russian sovereign wealth fund RDIF, some Middle Eastern partners and the Russia-China Investment Fund, a similar investment vehicle in partnership with China Investment Corporation.

“Transneft adopts pipeline-related equipment and technology from Japanese enterprises and the procurement of crude oil from Russia through the pipeline operated by Transneft,” said the joint fund.

For the second deal, completed in November, RJIF teamed up with RDIF, leading Middle Eastern funds in the initial public offering of the EN+ Group, an aluminum and power producer, which exports a considerable amount of metal to Japan. The group recently floated on the London Stock Exchange, raising $1.5 billion from international investors, which represented an enterprise value of $8 billion. It also controls EuroSibEnergo, the largest independent power producer in Russia.

The RJIF was officially launched with each stakeholder contributing $500 million this September to jointly pursue and invest in projects that “promote economic, trade and investment co-operation between Japan and Russia”. Russia also hopes the vehicle will promote the transfer of technology and the entry of Russian companies into the Japanese market.