From left Petr Aven and Mikhail Fridman
A 2.4 billion hole in the budgetthe crash of a subsidiary in the Netherlands, the frantic attempts to secure the group and sell the shares: the sanctions have put Putin's oligarchs in serious difficulty Mikhail Fridman59 years old, and Peter Aven68. This is demonstrated by the accounts, just deposited, of theirs holding ABH which among other things controls Alfa Bank, the largest private bank in Russia.
The 2.4 billion hole
ABH Holdings, based in Luxembourg, with assets of almost 90 billion, lost 2.4 billion in 2022 after a profit of 1.8 billion in 2021. The immediate and tangible effect of the provisions to freeze assets and block financial assets, moreover contested in court by the two entrepreneurs who have sided against the war in Ukraine and claim their autonomy from Moscow. According to the EU, however, Peter Avenwho was Russia's foreign economic relations minister, one of Putin's closest oligarchs whom he meets regularly in the Kremlin while Mikhail Fridman he was known as the top Russian financier and facilitator of Putin's inner circle.
ABH is the western cornerstone (based in Luxembourg) of a huge economic empire that has grown - according to the US, the UK and the EU - under the protective wing of the Kremlin. Unicredit shareholder with 9.9%with an exercised but not yet executed right to sell (put).
The billions of LetterOne
Under the umbrella of this large financial company and its founder Fridman, there is not only Alfa-Bank but also one of the main Russian insurance companies (Alfastrakhovanie), then LetterOne, a Luxembourg investment company with over 20 billion in assets (it was one of Uber's major lenders), X5 Retail, one of the largest Russian large-scale food distribution groups with a turnover of 2.6 billion dollars which, according to the accusations, supplies the Moscow army, Veon's telecommunications companies with 160 million customers and 3.75 billion in revenues, and so much more.
Backs against the wall
Peering into the accounting records of Abh and LetterOne, Fridman's other major center of financial power, one understands how much sanctions can bite. To the point that the Moscow tycoon, who also has Israeli citizenship, and his partner Aven seem to have their backs against the wall and are selling their shares for 2.3 billion to the Moscow partner (not sanctioned) Kosogov. But their historic trusted managers remain at the helm, such as Pavel Nazariyan, who signed the Abh accounts. It is unlikely that a real regime change within the holding company can be achieved (or even perceived as such) if those who governed the companies headed by Fridman ten years ago remain in the key posts. However, the oligarch must act quickly if he wants to give a secure future to his group and its 41,600 employees.
In or out
The blow of the 2.4 billion loss in 2022 risks being just the beginning of a long wave and for this reason that in the ABH balance sheet, confirming the rumors, a future is outlined that sees in fact a sharp split between activities inside and outside Russia after the sale in May of Alfa Bank Kazakhstan, the deconsolidation of ABH Ukraine which changed its name to Sense Bank and a few days ago was nationalized by Volodymyr Zelensky and after the collapse of Amsterdam Trade Bank. Overall, all of this resulted in capital losses of 810 million.
But it will be above all the shareholding structures that will be revolutionised. In December 2021 there were seven economic beneficiaries of the group, two exited with the US and UK sanctions of March 2022 and since last year the capital has been divided between Andrei Kosogov (41% after taking over 37% of the two outgoing ones), Fridman (32.9%), Aven (12.4%) Unicredit (9.9%) and a foundation with 3.9%. Kosogov, low profile, power underground, former head of investment division, non-sanctioned and lives in Russia unlike Fridman and Aven who haven't been back since the war started. Among other things, Fridman lives in London in a 65 million pound residence.
Operation worth 2.3 billion
Now Kosogov is ready to take over the shares of the two founders for 2.3 billion. Then the door to Alfa Bank's western markets will be closed and vice versa. And Unicredit? Its 9.9% ABH, held at $325 million, was included in the consideration for the 2016 sale of one of its Ukrainian banks. At the end of 2021, the Italian bank exercised the right to sell which had to be satisfied within the first half of 2022. But the operation has not yet closed.
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Jul 25, 2023
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