The new class of entrepreneurs emerging in Russia

Since the start of Russia’s war in Ukraine, many Western companies have shut down operations in Russia, fearing that remaining operational in the country would have political and reputational, as well as economic, repercussions. And they did it in different ways and at different times: some decided to close shortly after the invasion and managed to do so in an orderly manner; those which took longer were blocked by the various decrees introduced by the Russian government to prevent the outflow of capital from the country; still others were even seized in response to Western sanctions, such as the subsidiaries of Danone, Carlsberg, Fortum and Uniper.

In this context, what remains of the large Western multinationals present in the country have long been the subject of speculation on the part of a new entrepreneurial class which is being born in Russia, and which is making its fortune thanks to all the companies foreign goods that it manages to buy at unbeatable prices. The objective of these entrepreneurs is then to develop, thanks to the spaces left empty on the Russian market.

All the restrictions imposed by the Russian government have greatly facilitated this trend. For example, last year it banned foreign investors from selling their companies in Russia without the approval of a special government commission: if the green light is obtained, the companies must still be sold at a discount of at least 50% of the market value. .

These rules were imposed for various reasons, including to discourage the precipitous flight of foreign companies from the Russian market and not to leave uncovered the country’s productive sectors which were mainly run by Western companies. Also thanks to these laws, tens of billions of dollars of profits from Western companies have been blocked in the country. Financial Times quantified between 18 and 20 billion for the year 2022 alone.

In addition, other more recent rules require those looking to sell their business to pay a sum compulsory contribution to the state budget, even if they gave them for free or for a symbolic sum. Also in this case the objective is to prevent the exit of capital from the country and to accumulate money to finance the war.

All this has created great business opportunities in cases where companies are ready to sell at any cost to leave. Those who benefit are relatively little-known people, who, before the war in Ukraine, were not among the richest in the country, and who can act freely because they are not subject to international sanctions like the most exposed oligarchs. However, these are not inexperienced personalities, but entrepreneurs or managers who have been in business for decades, in some cases even in the companies they bought and in others alongside billionaires and famous oligarchs.

Bloomberg reconstructed some of the most significant operations related to these people: since the beginning of the war, foreign companies in Russia have been sold for a total value of 21 billion dollars, including all branches of McDonald’s, of the group d Ball packaging and chemical manufacturer Henkel.

Ivan Tavrin, the former president of a Russian mobile phone company and former partner of billionaire Alisher Usmanov, recently spent more than $2 billion on Avito, a popular online classifieds platform in Russia. He has also acquired other companies in various sectors and is considered among the entrepreneurs who manage to make the most of this situation.

There is also the Arnest group of companies of entrepreneur Alexey Sagal, which went from being a leader in the field of cosmetic products to taking over the Russian branches of the Ball packaging company and the Russian Heineken breweries.

Another person who made a fortune thanks to the war is Alexander Govor, who took over all the activities of McDonald’s: he was already a partner of the chain, for which he managed 25 restaurants, but he managed to take over the entire network of 850 restaurants. a good price for Russian restaurants. Govor had been a partner of for years Yuzhkuzbassugol one of Russia’s largest producers of petroleum coke, a type of coal made from oil refining.

Source: ilpost


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