CIC, RDIF agree to raise $800m

Sovereign wealth funds the China Investment Corporation and the Russia Direct Investment Fund have signed a memorandum of understanding to raise a joint investment vehicle targeting $800 million, according to a statement.

The firms intend to tap opportunities in the tourism and infrastructure sectors in both countries, particularly Hainan, China, and Vladivostok and the Sochi region in Russia. Sochi was the destination of the recent 2014 Winter Olympic Games.

The fund, a private equity vehicle named the Russia-China Investment Fund, has teamed with Vcanland, which is focused on developing tourism infrastructure and senior living communities in China.

“The Russian travel and tourism industry is expected to grow at 4 percent annually, and tourism between Russia and China will grow even faster. China is the second most popular destination for Russian tourists, whilst Russia is the third-ranked destination of choice for the Chinese. About 3.3 million of Chinese tourists visited Russia in 2012 – a three times increase on 2007,” Kirill Dmitriev, co-chief executive of RCIF, said in a statement.

“We strongly believe that the robust momentum in bilateral tourism and need for senior housing will create enormous investment opportunities in the related sectors, generating attractive returns for investors.”

Russia and China have developed their investment activities together in recent months, investing in a number of cross-border opportunities. In March, the two funds teamed with an unnamed Middle Eastern sovereign wealth fund to make a $200 million investment in Sodrugestvo, a Russian agricultural processing company, Private Equity International reported earlier.

The investment came just two months before the RDIF launched its Far East investment plan, which mandated the fund to make every deal with a foreign co-investor, and added infrastructure and real estate investments to its portfolio, which has historically been focused on private equity investments. 

“Our deal flow is better than it ever has been and we are getting better pricing now thanks to event domestic legal reforms,” Sean Glodek, director at RDIF, told PEI earlier.

“A lot of the focus right now is on Ukraine but that is really secondary. The long term investment story in Russia is strong, and that is supported by the countries less worried about sanction risk who are deploying capital there now.”