Introduction
Russian President Vladimir Putin has authorized Armenian investment fund Balchug Capital to purchase shares in nine major companies owned by Goldman Sachs' Russian subsidiary, according to a decree published on Wednesday.
Context
Balchug Capital and Goldman Sachs declined to comment on the matter.
In January, Balchug Capital was set to acquire Goldman Sachs' subsidiary in Russia, allowing the U.S. bank to withdraw from the Russian market and recover some stranded capital.
Since the start of the war in Ukraine, Moscow has increasingly focused on foreign asset sales, demanding discounts of at least 60% and requiring transactions involving banks and energy companies to obtain Putin's approval.
Developments
The latest decree indicates that Balchug Capital may acquire Goldman Sachs International's shares in energy companies:
- Gazprom
- Rosneft
- Novatek
- Lukoil
- Tatneft
- Surgutneftegas
As well as in:
- Steelmaker NLMK
- Electricity Operator InterRAO
- Telecoms Provider Rostelecom
The total value of all shares listed in the decree is estimated at nearly $80 million, although the price of the proposed transaction has not been disclosed.
In response to Western sanctions stemming from Russia's invasion of Ukraine, which froze about $300 billion of Russian sovereign assets in the West, Moscow began redirecting foreign-owned funds in Russia to special "type-C" accounts, access to which is restricted unless a waiver is granted.
Large Western banks with Russian subsidiaries have repeatedly attempted to obtain permission from Russian authorities to sell their clients' assets at a discount, according to Ararat Mkrtchian, CEO of Armenian broker Sirius Capital.
These banks served as prime brokers for American and European funds, holding Russian assets, stocks, and bonds. With the sale of Goldman Sachs' subsidiary, the additional approval to liquidate assets will facilitate client exits from the market.
Balchug Capital's CEO and founder, David Amaryan, oversees all investment activity.
Last year, Balchug Capital acquired the Russian assets of U.S. machinery maker Caterpillar.
Conclusion
The recent authorization for Balchug Capital to acquire shares in significant Russian companies marks a pivotal moment in the ongoing interplay between international finance and geopolitical tensions, reflecting Moscow's strategy in the face of sanctions.