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Funds News

UPDATE 2-Putin gets SWF, PE backing for Russia fund

* Apollo’s Black shares platform with Putin

* Russia fund recruits top PE investors to advisory board

* China, Kuwaiti, Korea SWFs also join (Adds Putin holding one-on-one meeting with Apollo’s Black)

SOCHI, Russia, Sept 16 (Reuters) - Prime Minister Vladimir Putin said on Friday that the heads of some of the world’s largest sovereign and private equity funds would advise a new $10 billion state fund set up to attract foreign direct investment into Russia.

Among the advisers who will join the international advisory board of the Russian Direct Investment Fund (RDIF) are Apollo Global Management’s Leon Black, who joined Putin on the platform at an economic forum in the Black Sea resort of Sochi.

The fund was created to give major foreign investors greater comfort in Russia’s uncertain business environment and will be capitalised with $2 billion a year in state cash over the next five years.

It would invest on a risk-sharing basis in projects as long as its foreign partners at least match it, dollar for dollar.

The RDIF is targeting around $50 billion in foreign investment over the next five to seven years with a focus on deals that would meet the needs of Russia’s rising middle class and reduce the economy’s dependence on natural resources.

“I am certain that we can work together to achieve positive results,” Putin told a panel discussion.

Black, whose fund has $75 billion under management, called it a privilege to help the fund and described Russia’s “strong political leadership” as an advantage for investors at a time of global economic and financial difficulty.

Putin’s spokesman, Dmitry Peskov, said the prime minister later held a one-on-one meeting with Black to discuss Apollo’s plans to invest in Russia.

Also on the panel was Drew Guff, of $9 billion fund Siguler Guff, who said he would next week launch a Russia-dedicated tech fund, in a sign that Wall Street is warming towards Russia as an investment destination.

ADVISORY BOARD

The high-level investor backing for the RDIF will be critical to ensuring that it does not suffer the fate of other failed initiatives to boost investment rates in Russia that are less than half those in faster-growing China.

“This is a signal to other investors that Russia is highly attractive,” RDIF CEO Kirill Dmitriev said of the international advisory board.

The RDIF, set up in June, has already hired its investment team and is discussing 20 deals worth $5 billion in sectors including healthcare, energy efficiency, forestry and agriculture, Dmitriev added.

The international advisory board features many of the people Putin pitched the fund to at a meeting in May -- a group of investors who run a combined $2 trillion in assets.

They include, from sovereign wealth funds, Bader Mohammad Al-Sa’ad of the Kuwait Investment Authority, Chong-Suk Choi of the Korea Investment Corporation and Lou Jiwei of the China Investment Corporation.

“The way the RDIF is structured will definitely change the investment climate in Russia,” Al-Sa’ad said in a statement released by the RDIF.

From the private-equity side come Kurt Bjorklund of Permira, David Bonderman of TPG, Martin Halusa of Apax, Joseph Schull of Warburg Pincus and Steven Schwarzmann of Blackstone.

“It is always good to have friends when you are going to a place that you are not as familiar with,” Schwarzmann said in the statement. (Additional reporting by Gleb Bryanski,; Editing by Helen Massy-Beresford)

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