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China’s Silk Road Fund To Acquire 10% Of Russia’s SIBUR

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Representatives of both parties at a signing ceremony in Beijing. Photo from SIBUR's website

China’s Silk Road Fund, a US$40 billion state-owned investment vehicle to foster increased investment along the silk road, has agreed to acquire a 10% stake in SIBUR Holding, Russia’s largest gas processing and petrochemicals company.

No financial details were announced. As part of the deal, the Silk Road Fund will be able to nominate its representative to SIBUR’s board of directors.

"The fact that a financial institution as large as the Silk Road Fund became a shareholder of SIBUR confirms the investor appeal of the company and strengthens its positions in the international market," said Leonid Mikhelson, chairman of SIBUR, in a statement.

The transaction, which is expected to complete in January 2017, follows Chinese state petrochemical company Sinopec’s acquisition of a 10% stake in SIBUR at the end of 2015.

The deal, initially announced in November, is also China’s largest investment in Russia in 2016, the Silk Road fund said in a statement.

The establishment of the Silk Road Fund was announced in 2014 by Chinese president Xi Jinping to foster increased investment in countries along the One Belt, One Road economic initiative.

The US$40 billion vehicle aims to invest in infrastructure projects in Asia with an aim to upgrade trade and transportation networks between China, Central Asia and Europe.

The fund has previously acquired 9.9% of Russia’s liquefied natural gas project Yamal LNG. It also co-invested with Chinese state-owned enterprises in their purchases of Italian tyre company Pirelli and a hydropower project in Pakistan.

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