Russian sovereign wealth fund RDIF and Saudi Arabia’s SALIC will sign an agreement on Monday to team up in searching for investment projects in the Russian agricultural sector, a source involved in the agreement told Reuters.
President Vladimir Putin visits Riyadh on Monday for the first time in over a decade, seeking to capitalize on growing influence borne of military advances in Syria, strong ties with regional rivals and cooperation on energy policy.
SALIC - Saudi Agricultural and Livestock Investment Co - and RDIF will jointly search for investment projects in the Russian agricultural and livestock industries, the source said.
RDIF declined to comment. SALIC was not available for immediate comment.
SALIC, formed in 2011 to secure food supplies for the kingdom through mass production and foreign investments, has been looking at expanding in Russia and Ukraine, both major Black Sea grain producers and exporters, for several years.
SALIC is considering investing in Russian agriculture projects near the Black Sea, the RIA news agency quoted SALIC Managing Director Khaled al-Aboodi as saying.
“We believe that the Black Sea region of Russia is a very important region, and we want to invest there,” he said.
SALIC has agreed to buy Ukrainian farming company Mriya, which defaulted on its debts in 2014 and then went through a debt restructuring. The deal was done a year ago.
In 2017, Russian conglomerate Sistema (AFKS.MM) said SALIC would consider investing in RZ Agro, a Russian grain producer owned by Sistema and members of the Louis-Dreyfus family, but the deal has not yet happened.
“There is a lot of politics in their deals, while the improvement in our relationship is relatively new,” Dmitry Rylko, head of agriculture consultancy IKAR, said when asked why SALIC had not yet bought anything in Russia.
During Putin’s visit, Russia and Saudi Arabia plan to sign 10 deals worth more than $2 billion in sectors including agriculture, railways, fertilisers and petrochemicals, RDIF said last week.
The cooperation agreement between RDIF and SALIC comes less than two months after the kingdom agreed to relax specifications for wheat imports, opening the door to Black Sea imports.
Russia, the world’s largest wheat exporter, had long been seeking access to the Saudi market.
Russia also wants Saudi Arabia to open its market to Russian meat, Interfax news agency quoted Russian agriculture minister Dmitry Patrushev as saying on Monday.
He said Russia and Saudi Arabia planned to sign a memorandum on expansion of mutual food exports later in the day.