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Russia Said to Prepare Transfer of $10 Billion Fund Out of Sanctions' Reach

By Jason Corcoran and Daniele Lepido
September 01, 2014 9:57 AM EDT 46 Comments
Russian Direct Investment Fund has invested in Russia’s biggest bourse, OAO Moscow Exchange.
Photographer: Andrey Rudakov/Bloomberg
Russian Direct Investment Fund has invested in Russia’s biggest bourse, OAO Moscow Exchange.

Russia is preparing to transfer the ownership of a $10 billion sovereign wealth fund to the central bank from a sanctioned state-development lender, according to two people with knowledge of the plan.

Russian Direct Investment Fund’s co-investors, which include sovereign funds in Europe and Asia, are concerned that sanctions may affect their investments in Russia if the state lender controls the assets, according to one of the people, who asked not to be identified because the information is private.

The fund, created in 2011 to stimulate investments in privately held businesses and wean the state off its dependence on commodities, has secured the backing of funds including France’s Caisse des Depots et Consignations and Japan Bank for International Cooperation and last year hired Goldman Sachs Group Inc. as an adviser. Penalties over Ukraine have led Russia to invest in state-owned lenders VTB Group and Russian Agricultural Bank, whose access to international funds has been curbed, and the measures may also impede co-investors from dealing with RDIF.

RDIF said a decision on the transfer to the central bank has “not been made,” according to an e-mailed statement. A discussion about “possible separation” started two years ago, the fund also said.

The central bank’s press service in Moscow didn’t respond to calls and an e-mailed request for comment. Ekaterina Grishkovets, a spokeswoman for Vnesheconombank, the state development bank known as VEB, didn’t answer calls or an e-mail seeking comment.

BlackRock, Templeton

The U.S. and European Union imposed asset freezes and travel bans against dozens of Russians and companies under their control after Russia annexed Crimea in March. The sanctions targeted some of President Vladimir Putin’s close circle, the country’s biggest banks and energy companies.

RDIF, which counts former International Monetary Fund chief Dominique Strauss-Kahn among its nine-member supervisory board, has invested in Russia’s biggest bourse, OAO Moscow Exchange, and OAO Rostelecom, the nation’s largest fixed-line operator.

Russia in 2013 hired Goldman Sachs to promote the fund internationally. Monika Schaller, a spokeswoman for Goldman Sachs in Frankfurt, declined to comment by e-mail.

The fund is led by Kiev-born Kirill Dmitriev, a Harvard MBA graduate and former Goldman Sachs banker in New York. The fund makes equity, primarily in Russia, alongside international financial and strategic investors, according to its website.

BlackRock Inc., Templeton Asset Management Ltd. and Goldman signed an accord with RDIF in 2012 to invest in Russian companies preparing for initial public offerings.

To contact the reporters on this story: Jason Corcoran in Moscow at jcorcoran13@bloomberg.net; Daniele Lepido in Milan at dlepido1@bloomberg.net

To contact the editors responsible for this story: Elisa Martinuzzi at emartinuzzi@bloomberg.net Brad Cook

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