China Investment Corporation (CIC), China’s sovereign wealth fund, and the Russian Direct Investment Fund (RDIF), the fund recently established by the Russian government, announced plans to set up the $3 billion to $ 4 billion Russia-China Investment Fund, a vehicle to make equity investments primarily in the Russia economy.
The RDIF and CIC will each contribute $1 billion to the new fund and expect to raise another couple of billion dollars from third-party investors. Vnesheconombank (VEB), Russia’s state development bank, will act as a strategic partner to the fund. The Russia-China Investment Fund will invest the majority of its capital in projects in Russia. The fund will operate commercially, and is expected to be formally established by the end of this year following all necessary approvals and to commence operations in the first quarter of 2012.
Vladimir Putin, Russian Prime Minister, and the Chinese Premier Wen Jiabao oversaw the signing of the memorandum of intent to create the Russia-China Investment Fund as part of Mr. Putin’s official visit to China.
The Russian Direct Investment Fund was established in June 2011. The RDIF is expected to be capitalized with $10 billion in Russian government funds over the next five years and is charged with making equity investments, primarily in Russia. In each investment it makes, the RDIF is required to secure co-investment that at minimum matches its commitment, thus acting as a catalyst for direct investment into the Russian economy.
The China Investment Corporation (CIC) is established as an investment institution in accordance with the Company Law of the People’s Republic of China. Its mission is to make long-term investments to maximize risk adjusted financial returns for the benefit of the shareholder. Headquartered in Beijing, CIC was founded on September 29, 2007 as a wholly state-owned company with the aim of diversifying China’s foreign exchange holdings and achieving higher risk-adjusted returns on its investments.
Kirill Dmitriev (CEO of the Russian Direct Investment Fund): Chinese Investment Corporation’s commitment is a resounding vote of confidence for Russia from one of the premier investors globally.