Russian SWF pushes accelerator on greenfield

RDIF’s CEO said it is about to launch a ‘massive outreach programme to Europe’ to help fund domestic transportation PPPs.

The Russian Direct Investment Fund sees greenfield infrastructure as a priority as it sets out to deploy the capital it has amassed through partnerships with other sovereign funds from around the world, according to the institution’s chief executive.

In a conference call organised on the eve of the St Petersburg Economic Forum, Russia’s answer to Davos, Kirill Dmitriev said the institution was now “focused on a number of transportation investments”.

He noted that RDIF recently formed a team to back St Petersburg’s Pulkovo Airport – a deal he expected to close in short order – and that it was already a shareholder in Vladivostok Airport. “We’re currently quite active on a number of airport opportunities in Russia and we’re very active on toll roads,” Dmitriev added.

One example is the Moscow Ring Road, a 109km motorway encircling the Russian capital. “We’re also exploring opportunities to partner with some Russian pension funds who have already invested in toll road infrastructure assets, to invest jointly with them on these,” Dmitriev said.

He observed that these assets offer “good” returns, typically within the 12-15 percent range.

Dmitriev was hopeful that attempts to attract European co-investors to fund Russian PPP projects, similar to the recently signed tie-up between Italy’s ANAS and RDIF on Russia’s M4 motorway, would come to fruition. “We’ll be on a massive outreach programme to Europe,” he said.

“Frankly we’ve not been fully utilising the opportunity to work jointly with European partners over last two to three years.”

Asked by Infrastructure Investor about the impact of European sanctions currently targeting the Russian economy, he remarked that these did not preclude EU entities from co-investing in Russia alongside RDIF.

However, he said, “for many European banks and funds, there is a stigma associated with considering Russian opportunities. It’s not legally limiting, but [investing in Russia] right now is not a fashionable thing to do”.

Yet he appeared cautiously optimistic about prospects for a gradual warming in sentiment. “Frankly, this is changing. Last year was a year of significant change, but time will tell.”

On the capital raising front, he observed that RDIF had already signed $20 billion worth of tie-ups with institutions from the Middle East. “We have a lot of capital from these partnerships to deploy. So frankly we do not seek any more,” he said. “We deploy [this capital] very conservatively.”