Jason Corcoran in Moscow -

The ambitious scale of investment planned for St Petersburg suggests a move to switch the capital back to President Vladimir Putin's hometown could be on the cards.

The former imperial capital, which served as the seat of power of the Russian empire for over 200 years, is regaining some of its old glory with a number of high-profile infrastructure projects costing an estimated $15bn.

Project financing from the government is already in place for the Orlovsky tunnel under the Neva River and the Western High-Speed Diameter motorway around the city. Other projects in the pipeline include a high speed toll road to Moscow, a new sea passenger terminal, a football stadium, bridges, a new airport and reconstruction of the New Holland Island.

Gazprom City

"These showcase-type projects for St Petersburg suggests the government may be looking to move the capital from Moscow," Chris Weafer, chief strategist at Alfa Bank says. "They could be looking at moulding it into Russia's Washington as a way of setting up an alternative power base to Moscow."

A move away from Moscow would be driven as much by politics as economics. The St Petersburg clan – a group of reform-minded Kremlin officials who knew Putin during his time in the city in the 1990s – will want to put a cap on Moscow's presidential-based power when the president steps down next year.

Mayor Valentina Matviyenko, a Putin ally, has lobbied to transfer elements of the federal Government to St Petersburg and was rewarded in February with the decision to move Russia's Constitutional Court to the city from Moscow next year.

Banks and oil companies have also quietly been moving assets to St Petersburg in recent years. Gazprom City, a controversial new development in Russia's second city, has been prompted by the energy giant's decision to move part of its operations from Moscow. State-owned bank VTB has also confirmed it's interested in new office space.

Putin made infrastructure a central theme of his final State of the Nation address, promising funds to improve Russia's crumbling roads, bridges and airports.

Infrastructure will again be a key theme at this weekend's St Petersburg Investment Forum, which is expected to trump London's Russia Economic Forum as the premier annual economic showcase for the country after the Kremlin ordered its officials to pull out on the eve of the event in April.

At the St Petersburg Investment Forum more details on the financing and design of the $3bn High-Speed Diameter motorway linking the city with highways to Scandinavia, Kyiv and Moscow are expected to be revealed. Half of the cost is to be met by the government's Investment Fund, and the remainder by private investors and the city budget. The European Bank for Reconstruction and Development last week announced its plans to invest $250m in the construction of the road, which is to be Russia's test case for public-private partnership.

Renaissance Capital is also working with Australian infrastructure specialist Macquarie Bank to provide financing for the road. And the Russian investment bank is set to announce a formal joint venture with Macquarie to make additional investments in Russia, according to a source close to the bank.

"The deal has been agreed, but there is some tension still on the logistics. Macquarie is being very tenacious about some of the arrangements," says the source.

Renaissance and Macquarie are believed to be talking to investors about setting up a multi-billion-dollar infrastructure fund to invest in transport, ports and utilities across Russia.

Stephen Jennings, chief executive of Renaissance Capital, told bne that: "There will be hundreds of billions of dollars of projects. The infrastructure financing requirement is massive. Russia will be very pragmatic at adapting private sector solutions. There will be a lot of projects and a huge range."

Jennings declined to comment on the tie-up with Macquarie, but said that Renaissance would not go it alone in the infrastructure space. "Unlike equity capital markets where we can create scale to have best sales and best capital market professionals, it's very questionable that a go-it-alone model is efficient if you want to be strong. There is a strong case for us to team up with somebody in that space – I think infrastructure is going to be one of the very next big developments in Russia."

Macquarie, the world's largest private manager of infrastructure, became the first bank to launch a dedicated European infrastructure fund in 2004 and its success has attracted rivals to the sector, pushing up valuations for assets that provide pension fund investors with stable long-term returns. In 2006, it paid £8bn for Thames Water in the UK and made a failed approach to buy the London Stock Exchange

Macquarie already has an existing infrastructure partnership in South Korea with the country's second largest financial services group Shinhan, which is itself interested in investing in Russia.

Shinhan's chief executive, Shin Sang-Hoon, recently said the bank wanted to acquire a Russian bank to grab a foothold in the country's corporate banking business, but admitted that earlier talks to form a partnership with Macquarie in Russia had been dropped.

Other potential Russian investors include Goldman Sachs, Morgan Stanley and Credit Suisse, who have all raised infrastructure funds in other countries.

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