Russian billionaires Mikhail Fridman, Petr Aven and Petr Oven are set to sell their stakes in Alfa-Bank for $2.3bn. This is in an effort to get out of western sanctions.
According to four people familiar with the terms of the agreement, Andrei Kosogov (the oligarchs’ long-time business partner) has agreed to purchase the Russian bank from its Cyprus-based parent for Rbs178bn ($2.3bn). They added that the London-based Fridman and Aven (who have also left Russia) would no longer be indirect shareholders in Alfa-Bank subject to regulatory approval.
Russian oligarchs are resisting western sanctions that were imposed on them because of their alleged ties with the Kremlin. After Vladimir Putin’s invasion in Ukraine, the US and UK placed punitive measures on Alfa-Bank last. The EU introduced their measures last month.
Aven and Fridman have not been able to find any indications that selling Alfa-Bank would convince the EU to lift the sanctions. The EU member states were due to increase the sanctions by March 15.
Fridman, who was born in Ukraine and made his fortune in Russia before moving to London in 2015. He has long denied claims that he is connected to the Kremlin. Through a Luxembourg-based holding firm, he and Aven control 45 percent of Alfa-Bank together. This company also controls the bank’s Cypriot parent.
One person with knowledge of the transaction stated that they “want everything to get out their Russian assets so that sanctions are removed”.
The sale of the Russian central bank and tax authorities is expected to be completed later in spring. It may also be necessary to get approval from the US and EU sanctions authorities. The bank’s book value was $10.6bn before the Russian invasion.
Fridman and Aven did not respond to our request for comment. Kosogov confirmed that a sale had taken place, but declined to comment further.
According to one person familiar with the matter, the transaction is “a beautiful deal on the paper” as none of the parties are subject to sanctions with the deal between Kosogov (the Cypriot entity)
According to the source, “Fridman & Aven are exempted from sanctions. Kosogov takes over the bank and the bank has one Russian shareholder.”
Two people warned that finalizing the deal could prove difficult due to the complexity of obtaining regulatory approvals in multiple jurisdictions.
The letters were submitted by Leonid Volkov and Ilya Yashin, jailed war critics, to support Russian opposition figures like Leonid Volkov (head of Alexei Navalny’s Anti-Corruption Foundation). Volkov said that signing the letters was a “big mistake” in Russian opposition circles.
Over two dozen Russian oligarchs have filed legal challenges to western sanctions. Some, such as Fridman’s ex-wife, and the mother to Yevgeny Privgozhin (head of the Wagner mercenary organization), have been able to win court rulings against EU sanctions that were deemed not to meet the bloc’s criteria.
People said that the Alfa-Bank sale was also intended to relieve pressure on the bank in Russia. The Kremlin’s counter-sanctions of “unfriendly countries”, have made it difficult for Alfa to manage and access state funding.
Aven fled Russia after attending a roundtable meeting with Putin the day before the war broke out. He has not returned. Fridman lives in the UK. He lives in , a 65mn house in north London.
The Cyprus-based company stated in a filing last month that it was urgent to dispose of the controversial asset “to avoid any further regulatory, political, and reputational consequences”.
The bank’s ownership was “toxic” to its beneficiaries who wanted to keep their status as international investors.
UniCredit, an Italian lender, and a cancer foundation headed by a former Alfa-Bank top executive, hold shares in the Luxembourg-based company that controls the Cyprus company. They are also part of Fridman Aven, Kosogov, and Aven.
Kosogov was the former head of Alfa’s investment division. He had the lowest stake and the quietest profile of the five businessmen up to March last year, when Fridman, Aven and their partners German Khan, Alexei Kuzmichev were sanctioned by the UK and EU.
Khan and Kuzmichev sold their shares in the Luxembourg company to Kosogov. This increased his stake to 41%, as well their shares in LetterOne. LetterOne is a London-based investment vehicle that the oligarchs established in 2013.