As Dmitry Medvedev scrambles to secure improvements to Russia’s investment climate, attention is focusing on the Russian president’s initiative to create a $10bn state-backed private equity fund.

The move is aimed at attracting big global private equity groups and sovereign wealth funds that have steered clear of Russia because of its unpredictable investment environment, even as they have piled into other emerging markets in China and India. The Kremlin hopes the state’s participation in the project via $2bn in initial funding will help persuade investors that they will be shielded from the red tape and corruption that plague Russia. VEB, the state bank, is to co-ordinate the fund.

“It was a request from investors, from foreign funds, from private equity,” Arkady Dvorkovich, Mr Medvedev’s senior economic adviser, told the Financial Times in an interview. “They need some comfort.”