Russian Government Plans $10b Fund to Attract Western Investment

Russia’s government has announced an ambitious plan to spur private equity investment in the country and build Moscow into an Eastern European financial center. The plan involves setting up a fund of approximately USD 10 billion, along with a committee to be charged with advising Russian President Dmitry Medvedev. CEOs Steve Schwarzman (Blackstone), Lloyd Blankfein (Goldman), and Jamie Dimon (JPMorgan Chase) will be among the members of the committee.

Goldman Sachs has been invited to help “informally” steer the fund, an opportunity previously turned down by U.S.-based Carlyle. Apollo and Blackstone, two other American firms, were also approached about the project, but like so many other western investors, they have shown little interest due to concerns about Russia’s energy-based economy and perceived political corruption.

The fund aims to co-invest with Western private equity investors interested in Russian opportunities. So far, most Russian investment has been the domain of local firms.