CIC Puts $1B into Russia-China Fund

China Investment Corp. is pouring $1 billion into the Russia-China Investment Fund, a partnership with a Russian state vehicle, Reuters reported Tuesday. The state-backed Russian Direct Investment Fund will also commit $1 billion to the venture. The fund would also seek outside investments that would be four times the original capital commitments of the two state investment funds, Reuters wrote. The fund will co-invest in private equity deals, and in deals that “will strengthen Russia-Chinese business relations,” Reuters wrote.

(Reuters) – China Investment Corp will invest $1 billion in a joint Russia-China Investment Fund to be set up in partnership with a Russian state vehicle to promote direct investment, the head of Russian state development bank VEB said on Tuesday.

VEB Chairman Vladimir Dmitriev told reporters travelling with Prime Minister Vladimir Putin to Beijing that, under a memorandum to be signed later, the state-backed Russian Direct Investment Fund (RDIF) would also commit $1 billion.

The investment horizon for the fund would be around seven years, and the fund would seek outside investments that would be four times the original capital commitments of the two state investment bodies, Dmitriev said.

“This fund will be above all oriented towards financing projects of common interest that will strengthen Russia-Chinese business relations,” Dmitriev said.

The announcement marks the first outside promise to invest with the newly created RDIF, which will be capitalised with $10 billion in state cash over the next five years.

The RDIF’s mission is to co-invest in private equity plays on a risk-sharing basis, with foreign partners required at least to match its investments, dollar for dollar.

The Russia-China Investment Fund, co-run by RDIF and CIC, will invest at least 70 percent of its capital in Russia and neighbours Kazakhstan and Belarus, which have formed a customs union. Up to 30 percent may be invested in China. (Reporting by Gleb Bryanski, Writing by Douglas Busvine; Editing by Will Waterman)