Russian buyers of foreign assets seen as “new elite”

Russian buyers of foreign assets seen as “new elite”
A new business elite is emerging in Russia as the private sector is remade following the wave of exits and deal by international brands caused by sanctions. / bne IntelliNews
By bne IntelliNews November 16, 2023

Many of the buyers of foreign assets in Russia that have emerged since the full-scale military invasion of Ukraine are still unsanctioned and do not belong to the “old guard” of Russian billionaires, or so-called stoligarchs close to Kremlin, Bloomberg writes, seeing this as emergence of “new economic elite”.

As followed by bne IntelliNews, sanctions for Russia's military invasion of Ukraine have unleashed a tsunami of M&A deals as over a 1,000 Western companies have suspended operations in the country and seek to offload Russian assets at considerable discounts.

Among the "new elite" emerging as buyers of these assets Bloomberg particularly notes such businessmen as the ex-CEO of MegaFon mobile major and tech investor Igor Tavrin, Arnest Group of Alexey Sagal, and Alexander Govor as examples of such a “new elite”.

As followed by bne IntelliNews, Tavrin's Kismet Capital Group has been involved in some of the most valuable foreign asset exit deals from Russia, including the sale of Avito online classifieds portal by South African Naspers and the sale of Melon Fashion Group assets.

Sagal's Arnest group picked up the assets of Dutch brewing major Heineken in Russia for a symbolic price of €1. Arnest was also reportedly slated to buy Carlsberg's business in the country, before it was de-facto nationalised. Arnest appears to have been preparing an entry into the brewing and beverage sector by buying the production of aluminium beverage cans from the American Ball Corporation for $530mn in 2022.

Bloomberg reminds that Sagal’s wife Elena used to be the general director of Arnest, before serving as a senator in the upper chamber of Russian parliament for several years up until 2012 as a member of the ruling United Russia party.

McDonald’s sold its Russian assets to Russian licensee Alexander Govor and the rebranded chain quickly regained its fast food market lead. Govor’s fortune started from his holding in Yuzhkuzbassugol, one of Russia’s biggest coking coal producers, which he excited in 2007 selling to mining and energy major Evraz part-owned by billionaire Roman Abramovich.

Still, the established tycoons are those who have benefited the most from the foreign exodus from the Russian market.

Oligarch Vladimir Potanin has topped the list of new owners of foreign companies pulling out of the country after Russia's full-scale military invasion of Ukraine, according to the rating compiled by Forbes. Potanin is estimated to have acquired assets with gross profit of RUB49bn ($0.7bn) in 2021.

Out of 25 positions in the Forbes ranking, the second place went to Vladimir Sviblov (bought Russian assets of gold miner Kinross Gold, RUB38.6bn gross profit in 2021), the third place to Ivan Tyrishkin and partners (Home Credit Bank, Home Credit Insurance and financial services, RUB36.5bn).