RDIF co-invests in rice and veg with Middle Eastern investors

The RDIF plans to make $4bn in co-investments to agriculture aby 2018, and will focus on businesses with local and export markets, its chief executive officer Kirill Dmitriev said earlier this week.

The $10 billion Russian Direct Investment Fund has co-invested 9 billion roubles ($140 million; €122 million) in vertically integrated rice business AFG National, along with several unnamed Middle Eastern investors.

No overall figure was disclosed, but each investor contributed almost equal amounts to the 9 billion-rouble investment, according to an RDIF spokesman. It is not clear how many parties co-invested in the project.

The RDIF has made $2 billion in co-investments to agriculture and plans to a commit further $2 billion in the next two years, its chief executive officer Kirill Dmitriev told Agri Investor earlier this week.

AFG National is a leading Russian rice producer and distributor. It is now building and designing agricultural projects intended to substitute for vegetables and fruit imports that would have entered the Russian market from the EU before sanctions and Russian import bans in 2014.

Dmitriev said agriculture is now one of RDIF’s top priorities, after those sanctions and the devaluation of the Russian rouble created strong opportunities to invest in domestic production.

He added the RDIF would continue to partner with the Thai agribusiness Charoen Pokphand, with which it recently co-invested in what is set to be Russia’s largest vertically integrated dairy. Charoen Pokphand is not an investor in this particular project, the RDIF spokesman confirmed to Agri Investor. AFG will, however, target Asian markets with a new rice production project, according to Dmitriev.

AFG’s distribution network currently includes Russia, Europe and former Soviet countries.

The new investment will go into consolidating land for large-scale rice production, as well as potato, field vegetable and apple production projects. AFG will also use the financing to build  infrastructure, upgrade its technology, expand its product line and develop new brands.

“AFG National is one of Russia’s leading rice producers and distributors with considerable export potential,” Dmitriev said in a statement announcing the deal.

“The company is also active in production of other crops and has been a significant contributor to the statewide strategy of import substitution. Investment in the company, which will use some of the funds for non-organic growth, offers a unique opportunity to consolidate agricultural land suitable for rice cultivation in Russia, where there is currently a lack of modern rice irrigation systems.”

Since RDIF was established in 2011, it has invested or committed more than 760 billion roubles ($11.46 billion; €10.25 billion), of which 70 billion roubles were the fund’s own resources, and 690 billion roubles were provided by its international co-investors, partners and banks. Co-investors with RDIF are required to at least match investments by RDIF.