RDIF, Israel’s LR Group to invest $100m in Russian dairy

Russia’s sovereign wealth fund has partnered for the first time with the Israeli investment firm to invest up to $100m in Russia’s dairy farming and milk processing sectors.

The Russian Direct Investment Fund (RDIF) and Israel’s LR Group are working together to identify “the most promising regional projects” as part of the first phase of their agreement to jointly invest up to $100 million in Russia’s dairy sector, Russia’s sovereign wealth fund said in a statement.

A spokesperson for RDIF told Agri Investor that the agreement will be “signed shortly” but declined to comment further. A source familiar with the RDIF and its operations noted that the agreement is intended to mark the start to a “long-term cooperation.”

The announcement comes on the heels of Israeli Prime Minister Benjamin Netanyahu’s visit to Moscow and his meeting with Russian President Vladimir Putin earlier this month. According to RDIF, both leaders identified bilateral cooperation in the agricultural sector as a priority.

“We will focus our joint search for attractive investment opportunities in the dairy sector, an area in which many of RDIF’s international partners have shown interest,” RDIF’s chief executive Kirill Dmitriev said in the statement. “The efficiency of the domestic agribusiness will be significantly improved by the participation of our Israeli partners and through the use of innovative technologies and best global practices.”

The agreement marks the first time RDIF – which has $10 billion in assets under management – is partnering with an Israeli investor. But the fund has established a number of partnerships in different countries, including one with the CP Group in Thailand for co-investments in the dairy and poultry sectors. In 2011, it launched the Russia-China Investment Fund with China’s CIC and last year it invested in EFKO, a Russian oil and fat products company, alongside the United Arab Emirates’ sovereign fund Mubadala.

Founded in 1985, the LR Group invests in a range of sectors including agriculture, health care, telecoms and infrastructure in high-growth economies. Since its inception, the firm has implemented more than 400 projects with a total value exceeding $1 billion.

“Today, the Russian government is providing unprecedented financial support for the development of the dairy sector,” LR Group’s chief executive and co-founder Ami Lustig said. “Adaptation of the best technologies and creation of vertically integrated regional dairy clusters will significantly increase milk production. We understand the importance of this work to ensure Russia’s food security and appreciate the professional experience of RDIF in international projects.”