by Gaochao Yi
ST. PETERSBURG, Russia, June 17 (Xinhua) -- Russian President Dmitry Medvedev on Friday officially announced the launch of the Russian Direct Investment Fund (RDIF).
RDIF is designed to attract direct foreign investment into local and international development projects with the Russian state providing financial backups or guarantees.
The announcement was made at the 2011 St. Petersburg International Economic Forum.
The government is expected to pump in up to 10 billion U.S. dollars into RDIF in the coming five years.
According to senior executives of the investment fund, every investment the fund makes will need to be in conjunction with leading institutional or corporate investors.
The RDIF is seeking to sign its first corporate investment partner within the next six to eight months.
"The creation of the fund is the result of extensive consultations with many of the largest institutional investors globally," RDIF CEO Kirill Dmitriev said. "International investors like RDIF focus on maximizing returns and will be managed by an experienced investment team and will give an opportunity to co-investors."
The fund's key investment objective is to generate superior investment returns by investing in the fastest growing sectors of the Russian economy.
While its main focus will be Russia, 20 percent of its capital will be targeted at opportunities outside Russia.
The investment fund pledges to have each and every investment transaction scrutinized by at least two independent investment teams to guarantee maximized quality of investment.
The minimum ratio of co-investment by a qualified international co-investor and RDIF is 1:1. To qualify, according to RDIF's published regulations, prospective co-investors must have either assets under management exceeding 1 billion dollars for financial investors or revenues over 1 billion dollars for strategic investors.
RDIF investments will range from 50 million dollars to 500 million dollars, with its own stake limited to less than 49 percent of those investments.
When asked about the potential financial and political risks the investment fund might encounter, senior RDIF executives said the investment fund would target long-term strategic investment with solid government backups.
"The RDIF will cooperate with the Russian ministries of finance and economic development as well as with the Russian president and prime minister," Dmitriev said.
Cooperation from the Russian government will be important to the success of the investment fund, said Vladimir Dmitriev, chairman of Vnesheconombank, which is a partner of the RDIF.
The bank chief also said Russia's size would also mitigate against risk.
"Russia's the world's sixth largest economy; eighth largest market; with the highest per-capita GDP among the BRICs countries (Brazil, Russia, India, China and South Africa); with the highest growth in private consumption per-capita among the BRICs; with low government debts and massive foreign reserves," he said.
