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New Silk Road Finance Awards

CEE & Central West Asia: Best Individual BRI Project or Initiative in the Region 2017

Silk Road Fund 10% purchase of stake in Sibur (Russia)

When president Vladimir Putin launched Russia’s ‘pivot to the east’ after the Ukraine crisis in 2014, it was met with scepticism by many in the west.

Initially, events seemed to bear out this gloomy prognosis. The predicted rush of Russian issuers to Asian capital markets failed to materialize, while foreign direct investment from the region also disappointed.

The announcement of the Belt and Road Initiative, however, brought a new dimension to China’s relationship with its northern neighbour. Russian’ support for the project provided a framework for several investments in the country by Chinese state-backed entities, most notably the Silk Road Fund (SRF).

The SRF dedicated to supporting the development of infrastructure, resources and energy along the New Silk Road, as well as promoting industrial capacity and financial cooperation between participating countries.

Notably, of the SRF’s biggest investments to date, two were in Russia.

In March 2016, the fund paid $1.2 billion to Russian private-sector gas firm Novatek for a 9.9% stake in the Yamal liquefied natural gas plant in Siberia. This was followed in December by the purchase of a 10% stake in Sibur, Russia’s largest petrochemicals group, for $1.3 billion.

This was a clear statement of intent and confirmed the importance of Russia to SRF, its Chinese backers and the Belt and Road Initiative.

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