Reuters reports that the privately-owned Midland Group, registered in Guernsey but with extensive business links in Russia and the former Soviet Union, said their cars would be built by Italian manufacturer Dallara,
The team, to be based somewhere near London, have yet to decide on engines or drivers.
"Of course the team will have a Russian flavour and in time we hope to bring a Russian driver into Formula One," said Midland chairman Alex Shnaider, a naturalised Canadian citizen born in St Petersburg.
"Midland is deeply rooted in Russia and the Commonwealth of Independent States and we are certain that, via Formula One, mutually beneficial relationships and businesses can be created as most international companies recognise that they must enter these markets."
"Our research into coverage of different sports showed that only three events met our criteria for international exploitation: The Olympic Games, World Cup Soccer and Formula One," added the 36-year-old.
"As the two others are quadrennial Formula One was the natural fit."
Founded in 1994, Midland employ more than 50,000 people globally. Their biggest recent project is a luxury hotel and residential complex in the business district of Toronto in association with the Trump Organisation.
"We understand that basic survival in Formula One requires a budget of around $100 million per annum and we are prepared for that," added Shnaider.
"Midland's involvement is market-driven. And so is the determination to build a team from scratch as opposed to buying an existing one. Midland Group is an investment company, and by creating a new team we are creating value.
"Midland is prepared to fund the development of the team entirely, but our unique position will help us attract sponsors."
