Goldman Sachs, Templeton Asset Management and BlackRock have agreed to team up with the Russian Direct Investment Fund (RDIF) to invest in Russian companies ahead of their initial public offerings.
The consortium of funds will invest a minimum of $100m in Russian companies that make at least $500m in annual revenues and are preparing to go public in the next six to 18 months.
The pre-IPO programme is seen as a way to provide funding to Russian companies at a time when it is difficult for them to tap equity capital markets, while also boosting interest in Russia’s stock market.
All companies that take part in the pre-IPO programme will be required to list on Moscow’s stock exchange, the Micex-RTS, but are permitted to have a dual listing abroad. The fund will be looking at private Russian and state-controlled companies that are set to take part in the government’s privatisation programme.
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All companies that take part in the pre-IPO programme will be required to list on Moscow’s stock exchange, the Micex-RTS, but are permitted to have a dual listing abroad. The fund will be looking at private Russian and state-controlled companies that are set to take part in the government’s privatisation programme.
The state-backed RDIF will be looking to invest in the companies at a 20 to 30 per cent discount to the companies’ eventual listing price. The three global funds taking part in the programme will decide individually which transactions they want to take part in, although they have not publicly said how much they will invest in total.
Announcing the programme at a meeting of bankers and fund managers including Lloyd Blankfein of Goldman Sachs and Vikram Pandit of Citigroup, Vladimir Putin, the Russian president, noted that the RDIF’s new programme was an important indication that foreign investors were “not only interested in the traditional spheres of the [Russian] economy,” meaning oil and gas.
Created last year, the $10bn RDIF has already invested in Micex-RTS and attracted sovereign wealth fund partners including the China Investment Corporation.
The RDIF also announced a deal with the Kuwait Investment Authority on Thursday. Bader Mohammed Al-Saad, chief executive of the KIA, said his fund would invest $500m in RDIF and also automatically co-invest with the RDIF in every transaction in which the fund chose to take part.
The RDIF cannot invest in a venture unless a foreign partner co-invests alongside it.
The pre-IPO programme is designed to boost the Kremlin’s plans to turn Moscow into a global financial centre, which has lacked direction.
Many Russian companies prefer to list in London where there tends to be greater liquidity and a wider pool of potential investors.
Only in the past year has Russia created a central security depositary and created a law to combat insider trading. Russia also lacks a strong domestic investor base.
Kirill Dmitriev, chief executive of the RDIF, said the pre-IPO programme would ultimately further the Russian stock market’s development. “The programme will support Russian companies at a critical moment in their capital raising.
“It has the potential to significantly increase the number and quality of Russian companies that IPO in Russia,” he said.
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