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The Kremlin has launched a charm offensive to pull in more foreign investment. In the latest move, President Vladimir Putin ordered RUB250bn ($8bn) to be earmarked in the 2013 budget to boost the capital of the Russia Direct Investment Fund (RDIF), which is designed to co-invest in Russian projects with the world's leading investors.

The RDIF, headed by Russian Young Turk and former Icon fund manager Kirill Dmitriev, was set up with a total planned capital that will reach $10bn, paid in in $2bn tranches over five years. The new money will increase the fund's total current capitalisation to RUB62.6bn by the end of 2012, with equal-sized tranches to be subsequently paid into the fund by 2015.

Sources told Kommersant that the RDIF is already prepared to effect investments in 2013 and January-March 2013 using the first tranche of the new money. The fund has chosen 12 prospective sectors into which it will invest RUB9.4bn, including infrastructure, transport and logistics. Injections into the agriculture sector alone will reach RUB7.8bn under this year's plan.

The plan is that the fund identifies attractive investments then co-invests with leading international funds, offering them some governmental protection in the process so they can get used to making money in Russia. Hopefully, this will tempt them to re-invest in the country.

Part of a plan

This extra money for RDIF is only the latest in a string of initiatives coming across the spectrum to make Russia more appealing to would-be investors.

The effort kicked off with Putin's announcement last February that he wants to see Russia's ranking in the World Bank's "Doing Business" survey rise from the current 120 to 20 over the next five years. Putin signed off on the first decrees immediately after being sworn into office as president in May.

Setting up the RDIF was was quickly followed by a similar fund jointly managed with the World Bank's private sector arm, the International Finance Corporation, that will invest into financial institutions.

The reforms to Russia's capital market that began with the merger of Micex and RTS last year was more of the same - and typifies this investment drive, as it involves concrete action and not just words. The concurrent creation of the new Central Securities Depository (CSD) that will start functioning this November is more of the same and brings to an end a decade-long debate on the need for a CSD. A technical reform in nature, the consequences of creating a single depository are enormous, as it allows a whole new class of international investor access to Russian securities that were off limits to them before due to regulation in markets like the US.

The September 18 Sberbank second public offering (SPO) of a 7.4% stake raised the government a useful $5.2bn, but a parallel motivation was to offer foreign investors a high-quality and attractive Russian asset. Part of the sales and placement process means all the world's major investment banks were forced to do their homework and take a long hard look at Russia before parting with their millions. The upshot - it is hoped - is that having done their due diligence, it will be easier for other companies to float their shares, because international investors have already done much of the hard work already. Several companies, including Promsyvazbank and MD Medical Group, have subsequently announced plans to IPO.

At a more prosaic level, VTB Bank hired famous Russian bear Jim Rogers to front up their agricultural fund as a "consultant." Given Rogers knows almost nothing about Russia as he publicly avoved in an email battle with Russian young gun Dmitri Alimov in 2003, he is clearly in this new role as much for PR purposes as anything else. Indeed, given the dramatic turnabout that Rogers' new job represents this is probably going to be one of the Kremlin's more successful PR stunts, as Roger has the ear of the investment community in the US.