Feb 9, 2023
Russia’s Biggest Wartime Dealmaker Feasts on Foreign Firm Exits
(Bloomberg) -- Ivan Tavrin was busy investing in cellular towers when Vladimir Putin invaded Ukraine last year. Since then, he’s become Russia’s biggest dealmaker.
In the last 12 months, the 46-year-old Moscow native has used his position as an unsanctioned investor to leapfrog the billionaire businessmen that traditionally dominate the market. The former head of a Russian mobile firm has spent at least $2.3 billion on technology companies, including Prosus NV’s local classified business Avito and an online recruiting platform that counts Goldman Sachs Group Inc. as a shareholder.
The war and subsequent international sanctions shattered three decades of economic integration with the West, leading foreign investors from Exxon Mobil Corp. to McDonald’s Corp. to leave Russia. Tavrin has been picking up the pieces, as many more established players face restrictions.
“In the short term, there definitely seems to be a Russification of the business landscape taking place,” said Liana Semchuk, an analyst at UK advisory firm Sibylline. However, “there is not much indication that these businessmen will be able to reach the same level of wealth and freedom as they had prior to the war,” she added.
Tavrin has built a reputation as a businessman and manager rather than a power broker and is not subject to any punitive measures. He declined to comment for this article.
Also read: Russia Tycoons Fear Tightening Kremlin Squeeze as War Drags On
His 151 billion ruble ($2.1 billion) October purchase of Avito, which had been valued at as much as $6 billion before the war, was financed by Rosselkhozbank JSC, a state lender that is subject to some US and European Union sanctions.
The US Treasury measures prevent the bank from raising long-term financing, but it has not been placed on the harsher Specially Designated Nationals list in part due to the key role it plays financing food exports.
Tavrin also bought a 23% stake in HeadHunter Group Plc last month from private equity fund Elbrus Capital for $147 million, with Elbrus and Goldman Sachs remaining shareholders. His Kismet Capital Group acquired Russian Towers, an independent operator of mobile infrastructure, in January 2022 just before the invasion.
He has also bid unsuccessfully for McDonald’s Russian restaurants and Yandex NV’s ride-hailing business, according to people familiar with the talks who asked not to be identified because they were private.
As the war approaches its one-year mark, both sides are bracing for the fighting to continue indefinitely. The US and its allies have consistently boosted the amount and sophistication of military assistance to Ukraine and regularly ramped up sanctions, causing an exodus of foreign firms from Russia.
Tavrin historically has invested in telecommunications, media and advertising assets and at one point was seen as close to Russia’s fifth-richest person, Alisher Usmanov. He’s partnered with Usmanov in several deals since at least 2009, and served as the chief executive officer of the billionaire’s mobile operator, MegaFon PJSC. Usmanov is sanctioned by the US, EU and UK.
Tavrin also raised around $768 million with three blank-check companies in 2020 and 2021. The first merged with the Nexters Global Ltd. game studio, while the two others that Tavrin started are approaching their original deadlines to complete a deal.
The businessman is not the only local scooping up deals. But the number of interested parties is limited due to proposed Russian legislation to restrict foreign ownership in many assets and sanctions against an ever-increasing number of people.
Vladimir Potanin, Russia’s richest person who was sanctioned by the US in December, bought Rosbank PJSC from Societe Generale SA and a stake in TCS Group Holding Plc from founder Oleg Tinkov, who said he was forced to sell after criticizing the war.
Several businesses have been sold to local management, sometimes with buyback clauses, and many companies did not disclose the terms they left on. McDonald’s franchisee Alexander Govor bought the company’s Russian restaurants, while Putin issued a decree transferring Exxon’s main asset in the country to an operator that includes state-owned Rosneft PJSC.
As the war drags on, even holdouts like Volkswagen AG, which halted production at its Russian plant after the invasion, are reconsidering their presence.
Billionaire Vladimir Evtushenkov’s Sistema PJSFC is in talks with the German automaker to buy its Kaluga plant, Kommersant reported Feb. 6, citing unidentified people involved in the talks.
“Russian investors are both under political pressure to buy the assets from departing investors and also many see an opportunity to acquire assets cheaply,” said Chris Weafer, chief executive officer of Macro-Advisory Ltd. “Forcing Russians to take their assets home, and scaring them about ever going West again, has at least created part of a silver lining around the sanctions cloud for Putin.”
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