RDIF and EBRD in $107m textile deal

Since its inception in 2011, the RDIF has deployed nearly $3.5bn with co-investors.

The Russian Direct Investment Fund (RDIF) and the European Bank for Reconstruction and Development (EBRD) have teamed up to invest in Cotton Way, a Russian commercial laundry and textile management business.

RDIF and EBRD have agreed to invest 3.6 billion rubles together (€80 million; $107 million) contributing fifty percent each, according to a statement.

Cotton Way is an industrial laundry and textile rental services in Russia, employing more than 2,000 people. Among its clients are both national state organisations and corporate organisations, including Russian Railways, Russia’s Ministry of Defence, hospitals, fitness clubs and hotel chains. The company has 12 manufacturing units and 30 warehouse complexes around the country.

Last year, Cotton Way built the country’s largest commercial laundry plant at the Sochi Olympic site, according to the statement. The facility, which was included in the venues construction program, will supply linen for the athletes’ village and other 2014 Olympic venues.

“Cotton Way uses the latest technology to enable companies to achieve efficiency gains and savings on their textile costs. Our investment will further enable Cotton Way to continue on its growth trajectory and improve the overall competitiveness of Russian businesses.” Kirill Dmitriev, chief executive of RDIF, said in a statement.

RDIF is a $10 billion fund which was set up by the Russian government in 2011 to invest in Russia. Since inception the fund has invested nearly $3.5 billion into Russian companies, of which just under $1 billion was invested by RDIF and more than $2 billion came from international co-investors, Maxim Arefyev, a director at RDIF, told Private Equity International.

This latest deal follows a busy year for RDIF. Last month, it backed Tigers Realm Coal Limited in a $48 million transaction together with Russian-based private equity firm Baring Vostok. In October, RDIF teamed up with Germany’s Deutsche Bank in October to invest in Rostelecom, Russia’s largest telecommunications company, which is listed on the Moscow Interbank Currency Exchange (MICEX).

In June, RDIF teamed up with a consortium including Titan International and One Equity Partners (OEP) to invest in Voltyre-Prom, a Russian agricultural and industrial tyre manufacturer. The firm also launched a joint venture with General Electric for the construction of mini power plants for manufacturing companies in Russia.

In the same month, RDIF joined forces with Abu Dhabi sovereign wealth fund Mubadala Development Company to launch a $2 billion co-investment fund which targets investments in Russia.