Russian investors pick up post-invasion bargains

Russian private investors are continuing to buy up assets at a discount as overseas companies are being forced by the Kremlin to exit the country at fire-sale prices.

Russia, which has generally had a small private equity market, saw the value of PE deals rise to €5.65 billion (about $6.18 billion) last year across 13 deals, up from €1.01 billion invested across 40 deals the previous year, PitchBook data shows. So far this year, there was only €1.23 billion in total across six deals.

Following government rules introduced in December, investors from "unfriendly" countries wanting to exit have had to sell assets at half of their market value, with 10% of the discounted sale price going to the state.

Since its invasion of Ukraine in February 2022, Russia has been subjected to heavy sanctions, and many international companies are no longer willing or able to have a presence in the country. In many cases, foreign companies have faced the dilemma of maintaining loss-making operations in the country or selling at a discounted rate.  
The biggest deal recorded last year was French banking giant Société Générale's sale of its Rosbank unit to Russian  investor Interros Holding for €3.12 billion. Interros is led by an ally of President Vladimir Putin, Vladimir Potanin, one of the country's oligarchs who is also a former deputy prime minister. Société Générale took a €3.2 billion hit to its net income from its sale of Rosbank.

In April, Augment Investments—which is owned by Russian billionaire Viktor Kharitonin, who has ties to the Kremlin—was part of a consortium that acquired the Russian operations of German consumer goods giant Henkel for €600 million. The company's CEO Carsten Knobel announced plans for the sale in early 2022, citing the group's support for Ukraine.

PE firms haven't had a large presence in Russia for some time, although some sovereign wealth funds still have stakes in Russian companies. In March, Russian oil producer Sibur, which is backed by Abu Dhabi's Mubadala Investment Company, acquired the 50% of RusVinyl that it didn't already own from its joint venture partner, Belgium plastics company Solvay, which was looking to exit the country.

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This article originally appeared on PitchBook News