General
Electric Co. is furthering two joint-venture agreements in Russia,
a new area of focus for the conglomerate as Russian officials aim to improve
energy and health-care infrastructure.
GE said Monday it will form separate ventures with Russian energy company Inter
RAO and state-owned technology-holding company Rostekhnologii.
Financial terms of the transactions weren't disclosed.
The Fairfield, Conn.,
company, Rostekhnologii and Inter RAO will create a jointly owned entity to
manufacture, sell and service GE's gas turbines and build a factory near the
city of Rybinsk,
the companies said.
"Inter RAO sees this agreement as a way to introduce modern, highly
effective solutions for steam and gas co-generation to the Russian energy
sector," said Chairman Boris Kovalchuk. "This will increase the
stability and reliability of the energy system."
According to Russia's
Energy Ministry, the country needs to invest $80 billion in the next 10 years
to address aging energy-generation assets.
With Rostekhnologii, the company will produce health-care equipment such as CT
scanners, angiographs and other diagnostic devices.
Russia's
government will spend more than $15 billion on health care from 2011 to 2013,
according to GE estimates.
GE will hold a 50% stake in each venture, while Rostekhnologii and Inter RAO
will each hold a 25% stake in the energy joint venture; Rostekhnologii will
hold a 50% stake in the health-care joint venture.
GE International President and Chief Executive Ferdinando Beccalli-Falco said
the partnerships are another example of GE's "company to country"
strategy, where GE aims to sell products directly to governments for large
projects.
The companies had signed a memorandum of understanding in June, a few months
after GE's chairman and chief executive, Jeff Immelt, was invited to Russia
to meet with Prime Minister Vladimir Putin.
Germany's Siemens AG, a GE
rival, has been expanding its business in Russia
in a range of industries including wind power and railway equipment.
At an investor meeting in December, Mr. Immelt said GE is concentrating on
resource-rich countries, where it expects company revenue to grow 10% to 15% in
2011.
GE has been focusing on China,
India, and the Middle East. However, it is expanding its efforts in Russia,
where it has had a small footprint in the past.
In 2009, GE opened a new sales, service and technology office in Moscow to serve the
energy industry in the country.
"Russia
is going to reframe and reinvest in their electricity grid," said Mr.
Immelt at the investor meeting in December. "It's the least efficient
electricity grid in the world. We see some good opportunities there."