Giant US insurer American Insurance Group (AIG) is planning to make further inroads into the Russian market with the launch of a $300m private equity fund dedicated to countries of the former Soviet Union.
AIG has teamed up with Interros, one of Russia’s largest investment holding companies, in a joint venture which will see the two firms each provide a minimum of $50m to cornerstone the fund’s launch. As part of the agreement, the two groups have also announced the launch of a $250m real estate fund for Russia and its neighbouring countries
“The AIG-Interros joint venture will generate new investment opportunities in dynamic, high-growth sectors of the Russian economy and seek to deploy significant amounts of capital,” the two firms said in a statement.
“AIG companies have been operating in Russia for several years and we believe that in the present environment we have the opportunity to expand our business in the region,” said M R Greenberg, AIG chairman and chief executive officer. “We are pleased to work with Interros in this joint venture and look forward to the new investment opportunities the joint venture will create.”
The fund is further evidence of the growing interest in Russia shown by overseas investors. Delta Capital, the Russian private equity firm which manages the US government-backed US Russia Investment Fund, is thought to be close to announcing a close of its first private equity fund targeting private investors. Delta Russia Fund LP is looking to raise around $100m. Baring Private Equity Partners has also found the country can deliver compelling returns, with its Russia-focussed fund, Baring Vostok Capital Partners, one of the outstanding performers within the international private equity fund manager's portfolio of emerging market funds.
AIG has sponsored 33 private equity funds to date and has committed capital in excess of $10.6bn. AIG's presence in Russia dates back to the former Soviet Union, when the company became involved in several large-scale insurance projects. In 1994, it launched AIG Russia and AIG Life insurance companies as well as the Russian-American Investment Bank.
Interros is a multi-facetted investment holding company led by leading Russian businessman Vladimir Potanin. It owns or manages around US$4bn of assets, the vast majority of which are within Russia, and include Norilsk Nickel [which produces 20 per cent of the world's nickel output] and banking group Rosbank. The company says that it 'not only aims to preserve its standing as the biggest Russian investment fund,…but also to promote its authority at the international level in order to attract foreign investments in a similarly efficient manner.'