(Bloomberg) — Russian businesses are gasping for capital and pension funds are increasingly coming to the rescue.
As penalties over the conflict in Ukraine block access to capital markets, non-state pension funds are stepping in with funding for companies, according to Deputy Economy Minister Nikolay Podguzov. The more retirement assets are steered into investment, the bigger the savings for the National Wellbeing Fund, a rainy-day reserve the authorities have tapped to offset the effect of economic curbs, said Alexey Moiseev, a deputy finance minister.
The stranglehold of U.S. and European sanctions has limited borrowing abroad, forcing companies including oil producer Rosneft PJSC and Russian Railways to line up for assistance from the $75 billion Wellbeing Fund. Cue the private pension managers, who are now wielding 1.7 trillion rubles ($26 billion) in savings after recovering about a third of the industry’s assets when the government unblocked them last quarter.
“Before considering financing from the Wellbeing Fund, we need to employ other sources available, and pension funds are a good option,” Podguzov said in an interview last week.
Retirement pools are set to receive as much as 500 billion rubles annually, and at least half of that can be used to finance infrastructure projects, said Podguzov, who’s served as a liaison brokering meetings between pension managers and the biggest bond issuers.