Russian stock exchange gains big investors in RDIF and EBRD

On January 30, the recently-launched Russian Direct Investment Fund (RDIF) and the European Bank for Reconstruction and Development (EBRD) announced a joint bid to acquire two stakes in Moscow’s Micex-RTS stock exchange.

It is the first major move by the RDIF, which was created on a government mandate last year, and aims to increase returns on investments in the Russian stock market.  If successful, the RDIF would have a 1.3 percent share in Moscow’s main bourse, while the EBRD would take 6.4 percent.

Responding to questions, RDIF chief Kirill Dmitriev explained the decision, “The primary reason is this is a good investment and will generate very good returns for us.  Underlying that, following the (MICEX-RTS) merger, there are major cost and revenue synergies from the two exchanges. The basic investment case is it is a monopoly exchange in a growing market that will offer new products."

The announcement fulfills one prediction Dmitriev made during the 2012 World Economic Forum, when he eluded to three major deals to be announced in the coming month.

The move is important in the development of the Russian stock exchange as many Russian companies continue to show a preference for hosting their IPOs on the London or New York markets.  The EBRD’s investment in coordination with the RDIF is intended to secure the confidence of both Russian and foreign companies amidst renewed interest in the exchanges of developing economies. Commentators say there is potential for growth in the Russian stock exchange sector, with daily turnover of the country’s bourses rising from around $100 million in 2000 to $6 billion currently.  

The EBRD-RDIF deal comes on top of the December 2011 merger of the two Moscow exchanges, and the combined Micex-RTS bourse now accounts for almost one third of the entire daily turnover in Russian equities.