The Russian Direct Investment Fund (RDIF), a $10 billion fund set up by the Russian government to invest in Russian projects and secure co-investments from foreign investors, has signed on powerhouse K street lobbying firm Capital Counsel as tensions mount between Russia and the international community.
Documents filed with the US Justice Department last week show that the lobbyists will “educate and explain to US Department of Treasury and US policy-makers RDIF's role and relationship with United States partners and investors.”
RDIF declined to comment on the filing.
Capital Counsel will also be providing information on RDIF transactions to the Treasury Department.
RDIF may need those lobbyists as Treasury is tasked with enforcing the myriad sanctions put against Russia over incursions in Ukraine. Those sanctions may go further if President Putin makes good on recent indications the Kremlin may be taking the same protectorate view of the Balkans that it used to justify taking back Crimea.
RDIF’s international board has seen the involvement of several private equity fund managers including Leon Black of Apollo Global Management and David Bonderman of TPG Capital. Kurt Björklund, co-managing partner at Permira, left the board when tensions in Ukraine reached new highs in August, PEI reported at the time. Sources say LPs in the region are also getting nervous.
So far, RDIF is not known to have been investigated by the Treasury Department, although Russian banks and businesses have been, in addition to being impacted by sanctions. An article in the Moscow Times earlier this week indicated that the Kremlin may be looking for ways to hedge the nervousness of foreign investors by opening up RDIF to Russian LPs.
A notification on the Kremlin’s website says a proposal for this idea is forthcoming. RDIF is currently required to secure foreign co-investors before going to Russian entities for its project funding.
However, opening up the fund to local Russian interests may have its own drawbacks. The article notes that the foreign funds requirement was meant to keep local special interest groups from “hijacking” government cash. A manager at the fund told Vedomosti: “Lobbyists proposed that the RDIF invest in dubious projects, and the RDIF always answered: “OK, but find foreign partners who are interested.”
Calls to the Treasury department were unreturned at press time.