Russia and its neighbouring states are to benefit from a $100 million private equity fund set up by the US government. The Overseas Private Investment Corporation (OPIC) is backing a $100 million venture to stimulate investment in the region. US President Bush announced the launch of the fund during a four-day trip to Moscow.
OPIC will contribute at least $33 million to the fund and hopes to have a fund manager in place by the end of June. A report published by OPIC to determine supply and demand for private equity in Russia found an equity gap of $2.2 billion in 2003, which is forecast to increase to $4.6 billion by 2007.
OPIC president and chief executive officer, Dr Peter Watson said the fund will enhance US-Russia ties and contribute to President Bush’s vision for accelerated economic growth in Russia and its neighbouring states.
“This new, privately-owned investment fund will help provide long-term capital and critically-needed technology and management skills,” said Watson. He added that the fund would benefit from streamlined administration, a transparent and competitive selection process and a new leverage ratio that will both attract investment capital to Russia and provide an appropriate risk and return balance for the US government.
OPIC was set up as an independent agency of the US government in 1971. It currently supports eight private investment funds, with committed capital of $1.2 billion, which can invest in Russia and its surrounding region. Those funds have already invested a total of $820 million in 142 enterprises.