RDIF prepping $1bn Russia RE platform

The $10bn Russian government-backed Russian Direct Investment Fund is setting up a real estate team in preparation for a $1bn joint venture real estate platform with a Middle Eastern sovereign wealth fund.

The Russian Direct Investment Fund (RDIF), the $10 billion Russian government-backed fund that aims to attract foreign investment to Russia, is preparing to launch a $1 billion joint venture real estate platform with an unnamed Middle Eastern sovereign wealth fund, PERE has learned.

According to Sean Glodek, a director and member of the management board at RDIF, the Russian fund has been hiring and setting up a real estate team for a few months now, but has not made any real estate investments prior to this.

The details of the new platform were not disclosed as it is still under negotiation, but Glodek told PERE the partners would focus on shopping malls and other forms of retail property to begin with. RDIF will at most commit 50 percent of the expected approximately $1 billion of capital itself, since by regulation all of its commitments must be matched by an equal capital commitment from foreign investors.

RDIF’s new real estate team is working on its first direct real estate investment. While details of the deal were also not disclosed, Glodek said it should be completed in January.

All of RDIF’s joint venture platforms are designed to bring foreign capital into Russia and to increase bilateral trade between Russia and the respective investor’s country, and this real estate platform is expected to follow the same pattern, Glodek said. The platform should be solidified sometime in the first half of 2014.

To date, RDIF has formed eight partnerships with foreign investors or governments worldwide, including a $2 billion platform with China Investment Corporation, a $5 billion partnership with Abu Dhabi’s Department of Finance, and a €1 billion platform in Italy. All of these platforms have focused on private equity or infrastructure investment strategies.

The investor is focused on investments that compliment the country’s aspirations for a growing middle classes, better infrastructure and regional development.