Russian Firm RUSNANO Seeks Strategic Partners
Russian investment firm RUSNANO is seeking strategic partners to buy a 10% equity share in its $10 billion fund by the end of 2012, as it looks to wean itself from the support of the Russian government.
The decision comes at a pivotal time for the five-year-old nanotechnology-focused fund and the development of Russia’s tech and life sciences industries. Having committed north of $7.5 billion both by acting as an LP to venture firms and through direct venture bets on materials and life science companies like Bind Biosciences, the fledgling fund is now turning to the global audience to raise more cash.
“We expect first exits to happen this year, which is very important for valuation (of the fund),” said Dmitry Akhanov, chief executive of RUSNANO USA, noting all proceeds of the sale will be used to make more investments. “The (Russian) government has decided that RUSNANO is mature enough to become private and grow without direct government support.”
Akhanov said RUSNANO is looking for a mixture of Russian and international companies, development agencies and sovereign funds (like EBRD, Tamasec, QIC and others) that could act as strategic partners.
RUSNANO, which raised $5 billion from the Russian government and $5 billion on the debt market, is part of a larger push by the Russian Federation to transition from an oil and gas economy to one based on science and technology. Other efforts, including the $10 billion Russian Direct Investment Fund launched in 2011 and the $1 billion Russian Venture Company launched in 2006, are also aimed at sparking entrepreneurial flames and creating new industries in Russia.
These funding initiatives have come as work continues on another major Russian-government-backed effort-a 600-hectare business park called Skolkovo on the outskirts of Moscow that will host an advanced research university, a R&D park and start-ups specializing in space, nuclear, IT, energy and biosciences.
For RUSNANO, the initiatives function as additional instruments to a song it has been playing to tech and life science sectors since 2007.
“Our main goal is to make money, but that’s along with the goal of creating manufacturing and R&D facilities in Russia,” said Akhanov.
In its role as an LP, RUSNANO has plowed nearly $1 billion into five funds: It has provided $200 million of the $500 million Burrill Capital Fund IV LP, $125 million of the $250 million Harris & Harris and RUSNANO Opportunity Fund, $380 million of the $760 million strategic collaboration between Domain Associates and RUSNANO, $75 million of the $200 million Pangaea Ventures Fund III and $50 million of the $150 million DFJ-VTB Aurora fund.
Although the funds are distinct (the Burrill fund focuses on early-stage biotechnology, while the Harris fund backs late-stage nanotech ventures) they all aim to transfer expertise and commercialization from the United States to Russia.
The same is true of the 140 companies RUSNANO has backed directly. Of that batch, 12 are in the U.S., representing total RUSNANO investments of $600 million, according to information provided by RUSNANO. Portfolio companies include Joule Biotechnologies, which aims to convert sunlight and waste CO2 to usable fuel, and Crocus Technology, which focuses on magnetic random access memory chips.
“The world is global these days. No companies are only local,” said Akhanov. “We bring them to potential customers, industrial partners and provide additional opportunities like introducing them to local authorities.”