Dubai-headquartered terminal operator DP World has announced that it is launching a new joint venture (JV) with state-owned Russian investment fund to upgrade ports and logistics infrastructure in Russia.
The JV, in which the operator will own an 80% shareholding and Russian Direct Investment Fund (RDIF) the remaining 20%, will be called DP World Russia.
DP World claimed in a statement that the new company is expected to invest over time a total of US$2bn in upgrading Russian ports as well as introduce international best practices in operations to improve trade connectivity at the advantage of Russian businesses and consumers.
The announcement of the JV comes amid the particularly weak market conditions and economic challenges Russia has been facing since last year, when it was hit by the crash of oil prices while still bearing the burden of the severe Western economic sanctions implemented in 2014.
Ahmed Bin Sulayem, DP World’s chairman, said: “Russia has always been an attractive origin and destination market for us with huge long term growth prospects. This joint venture allows DP World and RDIF to build on each other’s strengths in bringing economic prosperity to Russia.”
“This JV will enable us to share with Russia our experience as a global port operator and trade enabler and to further enhance the already established strong relations between our countries,” he added.
RDIF, which was created in 2011 by the Russian Government, is a US$10bn fund established to make equity investments mainly in the Russian economy.
Kirill Dmitriev, CEO of RDIF, said: “DP World’s global expertise and its proven and tested ability to drive trade growth and develop efficient infrastructure, make it the ideal choice to support the long-term goals for the development of Russia.”
The port operator and the Russian fund signed a document determining the key terms and principles of the joint venture at the World Economic Forum annual meeting in Davos, Switzerland.
DP World pulled out of the Russian market in 2012, when it sold its 25% stake in the container terminal Vostochnaya Stevedoring Company (VSC) to Russian port operator Global Ports, who owned the remaining 75%, for US$230m.