ARAB INVESTMENTS IN RUSSIAN INFRASTRUCTURE

The article deals with the investments from GCC countries infrastructure (energy, road, port, airport, warehouse, social and IT facilities) in Russia. The empirical data on more than 60 M&A-deals collected from databases and open sources show that such investments grew up in recent 5 years. The author estimates the total value of 40 deals completed and funded by GCC investors at 22 Billion US dollars. GCC companies which are mainly performed by sovereign wealth funds prefer to invest via private equity platforms. These platforms substitute Islamic finance vehicles in the Russian financial market. Since 2013 Russian sovereign fund RDIF founded seven private equity platforms with GCC sovereign wealth funds (Abu Dhabi Investment Authority, Mubadala, Qatar Investment Authority, Public Investment Authority, Kuwait Investment Authority and Mumtalakat) for funding M&A-deals in local infrastructure. Besides that, Russia attracted Islamic capital via murabaha vehicle to fund building facilities for the Universiade held in Kazan in 2013. The author concludes that GCC investments into Russian infrastructure do not reach its potential. It is associated with remaining institutional features of Russian economy such as preference to use bank loans vs. equity financing, lack of ready-to-invest projects and low qualification of government bureaucracy to initiate and support infrastructure projects. These problems together with deficiency of public funds explain why Russian public-private partnership market is not mature enough to boost infrastructure projects that can boost overall economic growth.