Russian sovereign wealth fund plans more investments with Alibaba after JV, says CEO: Reuters

Sovereign wealth fund Russian Direct Investment Fund (RDIF) plans more investments with China’s Alibaba (BABA.N) after the two became partners in a Russian joint venture last week and separately invested in a developer of augmented reality technology, the RDIF’s head said.

Last week, China’s largest e-commerce firm, Alibaba Group Holding Ltd, joined forces with RDIF and two technology firms in Russia, hoping to access their client base of more than 100 million people.

Separately, RDIF and Alibaba, together with car producers Porsche and Hyundai Motor and other companies, invested a total of $80 million in Swiss-based firm WayRay which is focusing on developing holographic augmented reality displays for cars.

Kirill Dmitriev, who runs RDIF, a $10-billion sovereign wealth fund focusing on infrastructure, oil and gas sector to healthcare and financial sector, said that more joint investments with Alibaba may follow after the WayRay deal.

“Together with Alibaba we are ready to look at other Russian technologies in areas such as digital intelligence, cloud storage… We will give Russian technologies a chance to enter global markets more quickly,” Dmitriev told Reuters in a phone interview.

He said that there was no specific amount which RDIF and Alibaba would target to spend on the joint investments but “we have an opportunity to jointly invest hundreds of million dollars if needed.”

Dmitriev said that RDIF and the Russia-Japan Investment Fund, which was also a co-investor in WayRay, plan to remain among the company’s shareholders for some time while it expands.

There was no firm exit plan for the funds but one of the options may be WayRay’s initial public offering, Dmitriev said.

Dmitriev also said that RDIF and German industrial group Linde (LING.DE) plan to announce joint investments in a project in the Russian republic of Tatarstan. He did not provide further details.

In May, the press service of the president of Tatarstan said that Linde would be constructing a new olefin complex with capacity of 600,000 tonnes of ethylene a year at Nizhnekamskneftekhim plant in the republic.

Dmitriev, one of the driving forces behind Russia signing up to a global oil production pact with the OPEC nations and some other non-OPEC producers, said that the deal reached almost two years ago plays essential role in stabilizing oil market. Russia is not an OPEC member.

“This mechanism helps to avoid sharp shocks on the oil market which is very important to long-term investments, both for producers and consumers,” he said.

OPEC and its allies are scheduled to meet on Sunday in Algeria to discuss how to allocate supply increases to offset a shortage of Iranian supplies due to U.S. sanctions.

Separately, Dmitriev said that the Russia-China Investment Fund, established by RDIF and China Investment Corp. CIC.UL, as well as Japan’s SBI Holdings became shareholders in Russian lender Sovcombank following the deal announced earlier this year.

“We will help the bank to develop further, to play a role in co-financing Russia-China and Russia-Japan projects,” he said. Dmitriev said the Russia-China Investment Fund and SBI, who acted separately, bought minority stakes.

According to a Sovcombank regulatory filing from early July, the bank was conducting an additional share issue where SBI, RDIF and Bahrain’s Mumtalakat Holding Company, among other shareholders, took part.
Sovcombank, among Russia’s top 15 lenders by assets, is controlled by brothers Sergei and Dmitry Khotimsky, according to the latest shareholders structure available on the bank’s web-site.