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Tuesday, 11 May 2021 01:30 GMT

Abu Dhabi fund Mubadala may invest in Russian vegoil, rice firms


(MENAFN - The Peninsula) MOSCOW: Abu Dhabi state investmentvehicle Mubadala Development Co may invest in avegetable oil producer and a rice producer in Russia, a Russianstate-backed fund said, in a rare Gulf investment into thecountry's commodities sector.

Russia's agriculture and food production sector has beengrowing due to Moscow's decision to ban most Western foodimports in 2014 in retaliation for sanctions over Ukraine, whichare keeping many Western investors away from Russian assets.

"Russian agriculture ... is attractive to foreign investorsdue to the high growth rate in the domestic market and exports,"Kirill Dmitriev, the chief executive of the Russian DirectInvestment Fund (RDIF), said in a statement on Thursday.

The RDIF, Mubadala and other investors will consider aco-investment of about 10 billion roubles ($158 million) intoEFKO Group, a major vegetable oil and fat products maker inRussia.

The consortium may also invest up to 9 billion roubles inAFG National, a Russian rice producer which is also developingfruit and vegetables projects.

"Asia and the Gulf region are the only potential investors,we still have, while Western investors hold back frominvestments for obvious reasons," Andrey Sizov, the head ofSovEcon agriculture consultancy, said.

"All of them usually work with the RDIF because it is alocal partner approved by the government," he added.

RDIF and Mubadala have been investing in Russianinfrastructure, mining and other sectors since 2013.

By investing in agriculture and food projects in Russia,companies from the Gulf region are following Asian investorsthat have already announced plans to invest in milk and dairyproduction in Russia.

However, both AFG National and EFKO may need to look outsideRussia for significant growth. "Russia's domestic market (forvegoils and rice) is packed in terms of consumption per capitaand is unlikely to show any significant growth," Sizov said.

AFG National plans to use the investment to increaseagricultural production and expand its land bank, while EFKO,which owns the Black Sea terminal for vegetable oil supplies,will finance its expansion into some former Soviet countries, aswell as the Middle East and Asia, the RDIF said in a statement.

Co-investors will receive significant but not controllingstakes in both firms.

($1 = 63.3800 roubles)


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