November 25, 2013 / 7:55 PM / 4 years ago

UPDATE 1-Russian, Italian state funds agree investment deal

ROME/TRIESTE, Nov 25 (Reuters) - Russia’s state-backed private equity investment fund and Italy’s strategic state investment fund have agreed a deal to invest up to 1 billion euros ($1.35 billion) in companies and projects in the two countries, officials said on Monday.

Fabrizio Pagani, a senior economic advisor for Prime Minister Enrico Letta, said the Russian Direct Investment Fund (RDIF) would sign the deal with the Italian fund at a bilateral summit in Trieste on Tuesday.

Under the agreement the two funds will invest up to 500 million euros each.

“We’re not talking about small businesses but medium and large companies,” FDIF CEO Kirill Dmitriev told Reuters on the phone.

“It will increase Russian investments into Italy and will help fight the idea of Russia as a difficult place to invest in,” he said.

Dmitriev said the investment platform would involve a wide range of companies in sectors such as engineering, component manufacturing and air space.

He said they wanted to make a couple of investments next year, adding they did not rule out increasing the investment platform further down the road.

The Russian-Italian summit in Trieste, which will be attended by Letta and Russia’s President Vladimir Putin, is expected to focus on finance, energy and industrial issues.

Pagani said the cost of long-term gas contracts, one of the reasons for Italy’s high energy prices, would also be discussed.

“Certainly energy security and the need to have equitable gas prices close to market prices will be one of the issues on the table,” he said.

Italy’s state-controlled oil major Eni is Russia’s biggest wholesale gas client and imports natural gas on long-term contracts that are still in large part linked to high oil prices.

Eni is constantly renegotiating its gas contract portfolio and reached deals with its main suppliers in Russia and Algeria earlier this year.

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