Abu Dhabi fund exits deal with Russian helicopter maker to ‘comply with sanctions’

Parties had entered a deal several years ago to develop civilian aircraft

An Ansat GMSU 2 manufactured by Russian Helicopters. Tawazun had signed a letter of intent to buy 100 VRT500 helicopters from a Russian Helicopters subsidiary. Photo: Rostec

The Strategic Development Fund, the investment arm of the UAE's Tawazun Economic Council, has reached a deal to exit and unwind its partnership with Russian Helicopters for aircraft development programmes.

The fund said that after "the international crisis in early 2022, SDF paused any further investments in Russia to assure compliance with international sanctions", referring to the ongoing Russia-Ukraine conflict.

"In addition, SDF initiated discussions and negotiations with Russian Helicopters to unwind the partnership, in order to have the option to continue the development programmes independently in the UAE," the SDF said in a statement on Friday.

The fund did not elaborate further.

The SDF and Moscow-based Russian Helicopters entered into a partnership in 2020 through Singapore company Aeroter for programmes related to VRT500 choppers and VRT300 unmanned aerial vehicles, which were being developed by the Russian's subsidiary VR Technologies.

Tawazun acquired a 50 per cent stake in VR Technologies in 2019, in which it pledged to inject $400 million to prop up the company.

The move was seen to speed up the development of the company’s VRT300 and VRT500 models and “give impetus to new developments of advanced helicopter and UAV systems”, Sergey Chemezon, chief executive of Russian Helicopters parent Rostec State Corporation, said at the time.

Tawazun then signed a letter of intent to buy 100 VRT500 helicopters from Aeroter during the 2021 Dubai Airshow for €216.9 million ($248.2 million).

Delivery of the helicopters, which were intended for use by the government, were expected by the end of 2023.

The ongoing Russia-Ukraine conflict, which began in February last year, has resulted in several hefty sanctions against Moscow, with many international brands from several industries leaving the country.

The SDF said Friday's announcement is based on an agreement signed on November 14 between the two parties, "so SDF can continue to develop the programme independently in compliance with international sanctions".

The fund, which was established in 2019, is focused on the financial return and economic impact in the UAE’s strategic sectors through equity investment in local and international partnerships and developmental funding towards the Emirates' private sector.