Russian Fund Buys Stake in MICEX-RTS

(Reuters) – Russia’s $10 billion private equity fund is making its first investment, buying a stake in the country’s MICEX-RTS stock market with the aim of boosting the exchange’s IPO hopes and helping develop Moscow’s rudimentary capital markets. The Russian Direct Investment Fund, a $10-billion state fund set up to attract foreign direct investment into Russia, will buy a 1.25% stake in the exchange, according to a press release.

(Reuters) – Russia’s $10 billion private equity fund is making its first investment, buying a stake in the country’s MICEX-RTS stock market with the aim of boosting the exchange’s IPO hopes and helping develop Moscow’s rudimentary capital markets.

Moscow has been trying to build itself as a global financial centre, but this has been undermined by the fact that many of Russia’s companies go abroad to list their shares and raise debt.

A handful of companies have recently sought premium listings on the London Stock Exchange with inclusion in the prestigious FTSE 100 index.

The Russian Direct Investment Fund (RDIF), a $10-billion state fund set up to attract foreign direct investment into Russia, will buy a 1.25 percent stake in the exchange, according to a press release.

It is making the investment alongside the European Bank for Reconstruction and Development (EBRD), which will buy a 6.29 percent stake.

Russia’s RDIF fund was created six months ago to give major foreign investors greater comfort in Russia’s uncertain business environment and will be capitalised with $2 billion a year in state cash over the next five years.

It will invest on a risk-sharing basis in projects as long as its foreign partners at least match it, dollar for dollar.

“This investment is an important building block in strengthening Moscow as an international financial centre,” said Kirill Dmitriev, RDIF’s CEO, in a statement.

He said the RDIF can use its relationships with sovereign wealth funds and other investors to pursue additional pre-IPO investment in MICEX-RTS and to improve its IPO prospects.

Russia’s two main stock exchanges, MICEX and RTS, merged last year to create a unified platform with an estimated value of $4.5 billion that plans to float in 2013.

The merger will create a ‘one-stop shop’ for trading in stocks, bonds, derivatives and currencies, and clear the way for further market reforms in 2012 including the creation of a single depositary, MICEX said in a statement at the time.