In Russia a secondary market for foreign assets has begun to develop, with new owners of foreign assets considering their resale. Experts confirm that the activity in the resale of formerly western assets is increasing.
Several reasons are cited for why new owners might be interested in reselling businesses previously purchased from foreign companies:
- Challenges in Meeting Key Performance Indicators (KPIs)
According to the Government Decree No. 295 dated 6 March 2022 new owners must submit KPIs and their targets to the Governmental Commission for Control of Foreign Investments in Russia to obtain approval for buying out a business from a foreign company. Some new owners might find it difficult to meet these KPIs, prompting them to consider resale.
- Economic Interest
When purchasing assets from foreign companies, a mandatory discount of 50% off the market value is required. For subsequent transactions between residents, this requirement does not apply. Therefore, new owners have the opportunity to recoup their initial investment and potentially earn up to 50% more.
- Recent Deprivatization Trends
Resale transactions may also be influenced by deprivatization trends. New owners might find it challenging to integrate the purchased assets into their technological and operational frameworks, prompting a resale.
- Strategic Investors’ Demand
According to experts, strategic investors primarily drive the demand for assets previously bought from foreigners. Some initial deals were made by non-core investors who are now selling these assets to strategic players as part of market sector consolidation. An example of a public deal in this secondary market is the resale of Home Credit's Russian business. In May 2022, a pool of private investors acquired a 49.5% stake, and in February 2024, Sovcombank took over the stake.