Meeting with RDIF International Advisory Board members and investment community representatives

Meeting with RDIF International Advisory Board members and investment community representatives

Vladimir Putin met with members of the Russian Direct Investment Fund (RDIF) International Advisory Board and representatives of the international investment community.

June 1, 2017

19:30

St Petersburg

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Meeting with members of the Russian Direct Investment Fund (RDIF) International Advisory Board and representatives of the international investment community.

President of Russia Vladimir Putin: Good afternoon friends, ladies and gentlemen,

I would like to thank you for coming to Russia and meeting together in St Petersburg again.

I must say that many of our friends, including heads of sovereign investment funds, always come to the St Petersburg International Economic Forum. But today is the first time so many directors of sovereign investment funds from Europe, the United States, Asia and the Middle East gathered in one venue and we are certainly glad that this meeting is taking place in St Petersburg, on the sidelines of the international forum. Investors with over $11 trillion in total capital are present here today.

I suggest that we use today to discuss opportunities for expanding our cooperation, our partnership, and specific mutually beneficial projects. To create predictable and appealing conditions for their implementation, we are consistently improving the investment climate in Russia, and conducting a balanced, responsible macroeconomic policy.

Annual inflation already stands at around 4.1 percent. We hope that by the end of the year it will be below our goal of four percent.

The Bank of Russia is gradually reducing the interest rate. Interest rates on bank loans from commercial organisations and commercial financial structures are going down. Businesses have more opportunities for funding long-term investment projects. In general, positive dynamics have taken hold in the Russian economy, as you know.

Thus, the GDP has grown for a third quarter running and, importantly, despite a situation on global markets that is far from ideal. Regrettably, the situation is changing very slowly but for us this means we now depend less on the volatile external conditions and, most important, new drivers and development factors have come into play.

Our companies, as well as our industry and agriculture as a whole are becoming more competitive. Industrial production and non-energy exports are on the rise. For the time being these are modest figures but on the whole they are already putting us in an optimistic frame of mind.

We are setting ourselves a goal: By 2019–2020, national economic growth rates should exceed global rates. To that end, it is of principal importance today to ensure the inflow of capital to the Russian economy. We seek to offer investors convenient tools, such as joint investment platforms with the participation of the Russian Direct Investment Fund. It may be recalled that last year it received the status of a sovereign fund of the Russian Federation.

With its partners, the RDIF has brought over 1 trillion rubles in investment to Russia. Importantly, its projects have a significant positive impact on the domestic economy, while their profitability is substantially higher than that of other tools. I would like to note that the profitability of RDIF operations is roughly 15 percent a year in US dollars. As you know, this is a very good indicator compared to similar agencies and operations.

At the same time, long-term strategic partnerships have been established with international investors. Recently, a decision was made to establish joint funds with our colleagues in Turkey and other countries. At the moment, the aggregate capital of these partnerships is over $30 billion.

We are interested in capital going to industry, agriculture and branches of what is known as the new economy, that is, areas where our business is prepared to substantially increase its export and technological capacity. It is noteworthy that the results of IPOs by a number of our companies have become a substantial indicator of the growth of their effectiveness and capitalisation. The RDIF has acted as an anchor investor in IPOs that show good results and serve as further evidence of the reliability of and [high] yields on securities.

Next, we are willing to offer interesting facilities for capital investment in infrastructure, transport, energy and communications. We intend to make investment mechanisms more transparent and clear-cut in order to reduce investors’ risks and make their participation in long-term projects more beneficial. And of course, we count on continuing cooperation in sectors that have a direct impact on the quality of our people’s lives. These are above all healthcare, building high-tech medical centres and other important projects. Incidentally, some of these projects have already been implemented, including as a result of our meetings here at the economic forum in St Petersburg.

I would like to ask the CEO of the Russian Direct Investment Fund Kirill Dmitriev to elaborate on this cooperation and this work.

Please go ahead.

Russian Direct Investment Fund CEO Kirill Dmitriev: Mr President, colleagues, friends,

President Putin supported the creation of this fund six years ago, which we are grateful for. Judging by the calibre of our partners representing 23 countries, we see that the Russian Direct Investment Fund (RDIF) has become an economic investment bridge between Russia and the countries of the Middle East, Asia, Europe and North America. We are here today at the world’s largest meeting of the heads of institutional investors.

Investors are drawn to Russia for its strong macroeconomic indicators and economic growth, which we expect to be about 2 percent this year. As Russia’s sovereign fund, today we announced about 10 new investment deals with our partners for the first time at the St Petersburg International Economic Forum. These include investment in the Polyus gold mining company, the carrier GlobalTruck, the major oil service company Eurasia, the construction of Yuzhny satellite town in St Petersburg, investment in a joint concession holding created with an asset manager from Gazfond pension fund for implementing infrastructure projects, including investments in an alternate route to Kutuzovsky Prospekt, investments in the Central Ring Road, and others.

Prior to connecting with the RDIF, most of our partners had never invested in Russia, and we are grateful for the fact that we are making a lot of joint investments, including creating new industries and new infrastructure projects from the ground up. In particular, more than 550 billion rubles went to projects that were created from scratch and which did not exist before we started our investment programme. Our joint investments cover 95 percent of the Russian regions.

Even without taking into account our profitability from portfolio companies’ tax receipts, which tend to grow due to our investments, the funds invested in RDIF are returned to the state budget in the form of taxes in a matter of five years.

We continue to expand the geographical reach of our partnerships. The representatives of 14 new funds are attending this meeting, including senior executives of the world’s largest pension fund, the Japanese GPIF.

RDIF plays a significant role in building relations with Saudi Arabia. For the first time in the history of our relations, Saudi Arabia has invested in Russia. We have already invested in eight private companies and 10 public companies. For example, not only Saudi Arabia, but also our partners from the United Arab Emirates, China, Qatar, Kuwait and other countries have invested in Pulkovo Airport.

We work not only with institutional investors, but also the strategic ones. In particular, we are building Clinic 40 in St Petersburg [a project for designing, building and providing maintenance to the treatment and rehabilitation building of City Hospital No. 40] in conjunction with Pizzarotti, and we are renovating the M4 highway in a collaborative effort with Italy’s ANAS.

Finally, I would like to thank everyone for the discussion that we will now have, which will touch on our new projects, investments in the Russian Far East, transport infrastructure, the agricultural sector, as well as high technology and other industries.

Thank you.

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