Press Releases | « Realtid.se: The Swedish company RISE Capital has financed a pilot project in the Russian Arctic

27/10/17

The Swedish newspaper Realtid – about the pilot project of RISE Capital in the Yamal-Nenets Autonomous District.

The Swedish financial and investment company RISE Capital is a pioneer in Russia. By implementing this project, it became the first partner to finance the construction of kindergartens and schools in the Russian Arctic under the PPP mechanism.

Since 2012, the authorities in Russia have worked to solve the problem of queues for pre-school institutions for children aged 1.5 to 6 years. Many kindergartens were built during the Soviet era, but by the middle of the 2000s they either were at the end of their standard service life, or were closed down. The poor state of social infrastructure in many ways served as an incentive for the development of the public-private partnership (PPP) mechanism across the country.

In Russia, RISE Capital currently participates in the financing of PPP infrastructure projects.

According to Carl Meurling, Swedish Managing Director, the company was registered in 2013 in Stockholm and became in its own way a bridge between Russian projects and foreign investors, and vice versa.

The project in Yamal was implemented by the Russian company VIS Development, which is owned by RISE Capital. The project became the first PPP one for both the District and the company. It was one of the most successful Russian PPP projects in the social sphere, according to a study by the Agency for Strategic Initiatives of the Russian Federation and the Centre for the Development of Public-Private Partnerships.

The investment stage of the project is now complete: all the facilities have been built and put into operation. The project covers five towns located in the District: two kindergartens in the capital of Yamal-Nenets Autonomous Distrcit – the city of Salekhard, kindergartens in Novy Urengoy, Tazovsky and Gorki, and a combined kindergarten and school in Muravlenko. A total of 1,540 new school places have been created.

“We are pleased and proud to contribute to the improvement of Yamal-Nenets Autonomous District,” said Carl Meurling, Managing Director of RISE Capital.

The total cost of the construction of the institutions was 5.9 billion roubles (820 billion krona). Budgetary funds were not raised during the entire construction period. RISE Capital, through VIS Development, has transferred the facilities to YNAD on a turnkey basis, and the District will purchase them over several years, while the company manages the facilities.

The successful project implementation made it possible to consider issuing bonds under the project, which is a precedent for the Russian PPP market.

“It is interesting to develop cooperation with one of the fastest growing regions of Russia. We hope and believe that the project will create the conditions for the long-term economic development of Yamal,” said Carl Meurling.

On October 4, VIS Development, which belongs to RISE Capital, placed a series of bonds with a total value of RUB 1.7 billion (240 million krona). The securities was issued with the view to refinancing the funds raised to implement this project under the public-private partnership.

This is the first non-concession PPP project in Russia under which bonds were raised by a private party. The Government of Yamal-Nenets Autonomous District acts as a public partner in the project. All payments are included in the budget at the corresponding levels.

Investors praised the degree of reliability of the project – the placement of infrastructure bonds was completed in full at a rate of 11%. The bonds will mature in 1.5 years. The par value of one bond was 1,000 roubles.

“The project showed that Russia, despite its complicated relations with the West, is trusted by many investors.  We are very pleased with our cooperation with the local authorities and look forward to implementing new projects with them,” said Carl Meurling. RISE Capital already has three years of experience and a completed pilot project. This enables us to move on to the next step and attract external capital by issuing bonds for our projects.