Russia-China private equity fund buys stake in Russian forestry company

The Russia-China Investment Fund, a private equity equity fund focusing on investments related to the rise of the middle class in Russia, China and former countries of the Soviet Union, has acquired a stake in a forestry company in Russia’s far east. The investment, for a 42 percent stake, will help develop the largest “center for deep wood processing” in the region.

Press Release

Russia-China Investment Fund (RCIF) has completed the acquisition of an approximately 42% stake in RFP Group (Russian forest products group), a leading forestry holding company in Russia’s Far East. RCIF’s investment in the company will support the construction of the “Center for deep wood processing”, the biggest in the region.

The investment by RCIF supports the company’s strategy to further develop high value-added wood processing. The company recently commenced operations of a new manufacturing facility with production of premium larch veneer for the Japanese and Chinese markets. Furthermore, the company will utilize financing from shareholders, as well as debt financing, to construct a sawnwood plant scheduled to launch in the beginning of 2015. In total these two plants have the processing capacity of up to one million cubic meters a year.
Kirill Dmitriev, CEO of the Russian Direct Investment Fund (RDIF), Co-CEO of the Russia-China Investment Fund (RCIF), said:
“We are happy to announce that RCIF has completed the series of investments in RFP Group. It is an important investment in the Far East for a number of reasons but particularly so at the moment, as the region has experienced the worst flooding in over 100 years. RCIF’s investment will speed up the introduction and implementation of modern forestry technology and create new jobs. This is a strong economic commitment to the region.”
Hu Bing, Co-CEO of the Russia-China Investment Fund (RCIF), said:
“Investment in the forestry industry of the Far East fits well with the fund’s strategy to generate strong returns. RCIF is also committed to improve RFP Group’s operation, financing, and corporate governance. Both economies of Russia and China may benefit from cross-border synergies created by RCIF’s investment.”
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Russia-China Investment Fund (RCIF) is a private equity fund investing in unique opportunities brought out by rapid development of economic cooperation, fast growing trade, and increasing purchasing power of the middle class in Russia, China and CIS countries. RCIF will emphasize cross-border transactions, as well as investment opportunities within the region across a broad range of sectors to
facilitate the structural adjustment and the improvement of quality of those countries’ economies. The fund will invest in infrastructure, transportation and utilities, real estate, agriculture and forestry, business services, manufacture, TMT, health care, high-value added development and processing of natural resources, and other related sectors offering good risk-adjusted returns to investors.
Russian Direct Investment Fund (RDIF) was established in June 2011 to make equity investments primarily in the Russian Federation. RDIF’s management company is a 100 per cent subsidiary of Vnesheconombank. In each investment it makes, RDIF is mandated to secure co-investment that as a minimum matches its commitment, thus acting as a catalyst for direct investment into the Russian economy.
RFP Group (Russian forest products group) is the largest wood processing holding company in the Far East and ranks second in Russia for forest area under management. RFP Group manages 5 million hectares of forest with permission to harvest over 4.6 million cubic meters annually. RFP Group is the largest exporter of forest products in the Asia-Pacific region. The company is responsible for more than 10% and 15% of Russian exports of wood products to China and Japan respectively. The company’s personnel exceeds 6,000 people.