INVEST IN RUSSIA REGIONAL MARKET ENTRY AND INVESTMENT SUPPORT CENTER FOR FOREIGN STRATEGIC INVESTORS 2017 WWW.INVESTINRUSSIA.COM
The Russian Direct Investment Fund (RDIF) is Russia s sovereign wealth fund with reserved capital of $10 billion under management. Working alongside the world s foremost investors, we make direct investments in leading, as well as promising, Russian companies. RDIF was created in 2011 under the leadership of the President and Prime Minister of Russia to co-invest alongside top global investors, acting as a catalyst for direct investment in Russia. RDIF has invested and committed for this purpose over 1 trillion rubles (circa $19 billion)* of which RDIF alone invested over 100 billion rubles and 900 billion rubles came from co-investors, partners and banks. RDIF also attracted over $30 billion of foreign capital into the Russian economy through long-term strategic partnerships. * According to the exchange rate on the date of the transaction
RUSSIAN DIRECT INVESTMENT FUND TABLE OF CONTENTS RUSSIA S INVESTMENT ATTRACTIVENESS 6 REGIONAL MARKET ENTRY AND INVEST- MENT SUPPORT CENTER FOR FOREIGN STRATEGIC INVESTORS SAMPLE PROJECT. SITE SELECTION FOR NEW MANUFACTUR- ING FACILITY IN RUSSIA 12 22
REGIONAL MARKET ENTRY AND INVESTMENT SUPPORT CENTER FOR FOREIGN STRATEGIC INVESTORS RUSSIA S INVESTMENT ATTRACTIVENESS RUSSIAN DIRECT INVESTMENT FUND
FOREIGN STRATEGIC INVESTORS: RUSSIA HIGHLIGHTS 2013-2016 RUSSIA REMAINS ATTRACTIVE FOR FOREIGN INVESTORS Since 2013, the number of foreign strategic investors plans in Russia has been growing steadily, at a CAGR of 47% in 2013 2016. Number of FDI announcements, 2013 2016 In 2016, foreign strategic investors announced 259 projects to be implemented in Russia, i.e. 28% more than in 2015 and 219% more than in 2013. The top sector by foreign strategic investors plans numbers Machinery and equipment accounts for 18% of all FDI announcements in Russia. In 2016 Germany replaced Italy and the USA as the top source country for FDI announcements in Machinery and equipment. We believe that RDIF is uniquely qualified to effectively assist foreign companies in their site selection decisions in the Russian Federation and to help position the company to best respond to today s challenges in Russia, to gain market share, and to increase profitably and competitive advantage through local manufacturing. 2016 2015 2014 CAGR 13-16 47% 2013 81 102 202 259 RUSSIA S INVESTMENT ATTRACTIVENESS Source: RDIF analytics, company data
FOREIGN STRATEGIC INVESTORS PLANS IN RUSSIA (2016) 22 26 5 31 44 46 52 23 29 35 25 48 19 27 30 18 45 6 20 24 50 9 12 38 41 40 1 4 15 34 3 9 17 24 2 51 43 49 33 32 47 13 21 7 16 28 42 11 RUSSIA S INVESTMENT ATTRACTIVENESS 10 over 10 projects 5 10 projects up to 5 projects 14 1 Republic of Adygeya 2 Republic of Bashkortostan 3 Kabardino-Balkarian Republic 4 Karachayevo-Circassian Republic 5 Republic of Karelia 6 Republic of Mari El 7 Republic of Sakha (Yakutia) 8 Republic of Tatarstan 9 Chechen Republic 10 Altai Krai 11 Kamchatsky Krai 12 Krasnodarsky Krai 13 Krasnoyarsky Krai 14 Primorsky Krai 15 Stavropolsky Krai 16 Khabarovsky Krai 17 Arkhangelsk Region 18 Belgorod Region 19 Vladimir Region 20 Voronezh Region 21 Irkutsk Region 22 Kaliningrad Region 23 Kaluga Region 24 Kirov Region 25 Kursk Region 26 Leningrad Region 27 Lipetsk Region 28 Magadan Region 29 Moscow Region 30 Nizhny Novgorod Region 31 Novgorod Region 32 Novosibirsk Region 33 Omsk Region 34 Orenburg Region 35 Orel Region 36 Penza Region 37 Pskov Region 38 Rostov Region 39 Ryazan Region 40 Samara Region 41 Saratov Region 42 Sakhalin Region 43 Sverdlovsk Region 44 Smolensk Region 45 Tambov Region 46 Tver Region 47 Tomsk Region 48 Tula Region 49 Tyumen Region 50 Ulianovsk Region 51 Chelyabinsk Region 52 Yaroslavl Region
RUSSIAN DIRECT INVESTMENT FUND REGIONAL MARKET ENTRY AND INVESTMENT SUPPORT CENTER FOR FOREIGN STRATEGIC INVESTORS
WE INFORM AND SUPPORT FOREIGN INVES- TORS IN RUSSIA Khabarovskiy krai CHINA Sakhalinskaya oblast Kamchatskiy krai? NEW PROJECT JAPAN STRATEGIC INVESTOR S NEEDS: FIND A PERFECT LOCATION IN RUSSIA REGIONS Region 1 Region 2 Region 3? Regional Market Entry and Investment Support Center offers free guidance to make your new business in Russia a success, regardless of your plans: new investment sites, expansions to existing sites, industrial or technology partnerships, acquisitions or financial investments. We are aimed to help foreign strategic investors evaluate and select potential manufacturing sites, identify and evaluate Brownfield/ Greenfield partners, design and implement the necessary negotiating strategies and assist in ensuring that the investment decision is based on correct and current investment information. REGIONAL MARKET ENTRY AND INVESTMENT SUPPORT CENTER FOR FOREIGN STRATEGIC INVESTORS
SITE SELECTION FOR STRATEGIC INVESTORS: WHAT ARE WE BENCHMARKING? COSTS VARIABLE COSTS Utilities Labor Taxes Real Estate (Lease) FIXED COSTS Real Estate (Buy) Land ONE-TIME RELOCATION COSTS Machinery & Equipment Import Costs Ex-Pat Relocation OTHER COSTS Logistic Costs Training Costs Mitigation / Permitting / (Soft) Costs CONDITIONS LABOR Productivity Availability Skill Levels Turnover Reliability Relations REAL ESTATE Availability Condition Market Trends Terms Depreciation LOGISTICS Port Access Air Access Rail Access Truck Access MARKET Political Social Legal Financial Regulatory Geographical Risk QOL Housing Schools Recreation Safety Environment UTILITIES Access Reliability SERVICES Suppliers Customs Accounting Legal Financial Distributors DEMOGRAPHICS Unions Industry Presence Population Trends Employment by Sectors Etc. REGIONAL MARKET ENTRY AND INVESTMENT SUPPORT CENTER FOR FOREIGN STRATEGIC INVESTORS
SITE SELECTION FOR STRATEGIC INVESTORS: HOW ARE WE BENCHMARKING? 1 2 3 4 DESK-TOP LEVEL RESEARCH Costs Conditions I.D. Sources Entry into Model Report Results FIELDWORK INTERVIEWS Field Interviews (Foreign Investors, government officials) Fine-Tune Costs and Conditions Entry into Model Report Results SITE SELECTION Regions screening and identification of the sites with the best potential Detailed analysis and site selection Site visits PARTNERSHIPS Screening of potential partners and identification of those with the best potential Negotiation support REGIONAL MARKET ENTRY AND INVESTMENT SUPPORT CENTER FOR FOREIGN STRATEGIC INVESTORS
SITE SELECTION FOR STRATEGIC INVESTORS: OUTPUT FOR THE INVESTOR Benchmarking Methodology Industry Criteria Development Understand Industry / Sector Basis for SWOT Analysis Address Weaknesses Compare Desk-Top / Fieldwork Results Help Fill Information Gaps Feedback into Targeting / Marketing Efforts Promote Partnerships Regional Government negotiations and other support activities Promote Aftercare REGIONAL MARKET ENTRY AND INVESTMENT SUPPORT CENTER FOR FOREIGN STRATEGIC INVESTORS
REGIONAL MARKET ENTRY AND INVESTMENT SUPPORT CENTER FOR FOREIGN STRATEGIC INVESTORS RUSSIAN DIRECT INVESTMENT FUND HOW WE CAN SUPPORT FOREIGN INVESTORS SAMPLE PROJECT. SITE SELECTION FOR NEW MANUFACTURING FACILITY IN RUSSIA
NEW MANUFACTURING FACILITY IN RUSSIA KEY INPUTS FROM INVESTOR REGIONAL MARKET ENTRY AND INVEST- MENT SUPPORT CENTER. SAMPLE PROJECT WHERE WE CAN SUPPORT BUILDINGS AND EMPLOYEES Land needed = 1.000 ha Production and storage buildings Offices = 100 People, canteen and social building Employees 1,100 Gas = X1 m3 / hour Electricity = Y1 MVA Water = X water wells / Y m3 / hour Waste water treatment existing, exit = Z m3 per hour LAND Agricultural land = 15.000 ha Near to bigger town, good road and railway connections 1 2 3 Identify, screen and evaluate those regions which offer the optimum potential for INVESTOR Validate selected potential Greenfield manufacturing sites and, if necessary, identify, and evaluate alternative Brownfield sites Evaluate the costs and conditions of the sites against initial agreed criteria: the size of territory, the presence of local qualified labor resources and developed infrastructure, labor cost, logistics, taxes and incentives etc. SAMPLE PROJECT. NEW MANUFACTURING FACILITY IN RUSSIA 1 2 3 4 Assist in negotiations at the local level to insure that the INVESTOR makes the best investment decision which meets technical and business criteria
NEW MANUFACTURING FACILITY IN RUSSIA PHASE 1 WE CAN HELP YOU TO CREATE A ROAD MAP FOR YOUR INVESTMENT IN RUSSIA REGIONS SCREENING AND IDENTIFICATION OBJECTIVES OF THE AREAS WITH THE BEST POTENTIAL Summarize the current general economic potential and macroeconomic situation as well as future prospects of each of the regions, including an evaluation of the investment climate 1 2 3 Screening and assessment of the regions against criteria Initial assessment of the local infrastructure Identification / screening of a long-list of regions / potential investment areas Assess the local investment infrastructure across the pre-agreed cost and conditions criteria (i.e. available land size and average costs, Raw Material supply and transportation (supplier locations, road system, rail system, costs), Power supply (capacity, reliability, average costs), Fuel Supply (Natural gas), Water Supply/Source/Discharge (municipal, local well, costs), available human resources and average costs, etc. Identify and prioritize the regions/potential areas for Greenfield or Brownfield investment, screening down to a more manageable number of potential areas for further analysis SAMPLE PROJECT. NEW MANUFACTURING FACILITY IN RUSSIA
NEW MANUFACTURING FACILITY IN RUSSIA PHASE 2 DETAILED ANALYSIS AND SITE SELECTION 1 2 3 Preparations for Site Visit to Short-listed areas / interviews Visit Short-listed sites and interviews with local investors / officials Introduction and start of negotiations (real estate & incentives) WE CAN SUPPORT YOU IN MAKING AN INFORMED DECISION ABOUT THE BEST LOCATION FOR YOUR BUSINESS OBJECTIVES Stage 1 Select specific sites within the Short-listed areas (2-5) to further analyze/ validate (2-3 sites per area) Arrange a Site Visit to the selected sites Meet with officials to confirm the support for the project/investment at the Federal and/or Local administration levels Meet and privately interview local investors to confirm, amplify and validate the findings and conclusions of Phase I, specifically focusing on the investment climate, costs, conditions and opportunities, taxes and incentives Stage 2 Update / fine-tune all of the cost and conditions information analyzed in Phase I with real-time data gathered during the Site Visits Recommend 2-3 potential sites for final detailed negotiations Name the decision making people and agree upon negotiation plans Stage 3 Arrange a Site Visit for INVESTOR to the finalist sites being considered Give INVESTOR first-hand overview of locations prior to negotiations SAMPLE PROJECT. NEW MANUFACTURING FACILITY IN RUSSIA
NEW MANUFACTURING FACILITY IN RUSSIA PHASE 3 NEGOTIATION SUPPORT WE ACT AS A FACILITATOR BETWEEN YOUR TEAM AND THE RUSSIAN AUTHORITIES AT NATIONAL AND REGIONAL LEVELS OBJECTIVES 1 Networking and relationship building 2 Negotiations and other support activities 3 Building relations with local Government The development of the necessary public policy/government relations negotiating strategies The development of real estate negotiating strategies On-going support in negotiations Support in the project implementation, trouble shooting SAMPLE PROJECT. NEW MANUFACTURING FACILITY IN RUSSIA
Capital City, South Tower 8 Presnenskaya nab., building 1 Moscow, Russia, 123317 Telephone: +7 (495) 644-34-14 Fax: +7 (495) 644-34-13 info@investinrussia.ru www.rdif.ru www.investinrussia.com