Russia Strategic Share Grab: Western investors in Russian companies are on edge, anticipating a potential new presidential decree in Moscow that may compel them to sell their shares to the Russian government at substantial discounts. This move, if enacted, could grant Russia a “super pre-emptive right” to acquire shares in strategic companies from foreign shareholders. The context for this development lies in Russia’s efforts to reduce foreign ownership and influence over its major listed companies since President Vladimir Putin’s military intervention in Ukraine triggered extensive Western sanctions.
The methods employed by Russia include canceling special investment programs designed to attract international capital and bypassing global banks overseeing these schemes. These actions have resulted in losses for some investors and the disappearance of shares. Ivan Chebeskov, head of the finance ministry’s financial policy department, revealed that amendments to a presidential decree are in progress, potentially giving the Russian government this “super pre-emptive right.” However, the exact list of companies and the publication timeline for the decree remain uncertain.
The lack of clarity and an unpredictable timeline underscore the challenges facing investors seeking to adjust their exposure to Russia. Once enacted, this decree is likely to present additional hurdles for investors from countries considered hostile to Russia in recovering value from their Russian holdings. The potential impact includes changes in deal approval processes and the application of discounts during purchases or resales.
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Investment advisers anticipate Moscow’s purchases to reflect a discount of at least 50% on the market value of the company stock. While this doesn’t explicitly qualify as asset appropriation, it poses challenges for concerned sellers. The proposed decree raises concerns about the payment currency, given Russia’s recent decree forcing some exporting firms to convert a significant portion of their foreign currency revenue.
Some view this initiative as a fundraising tool for Russia amid signs of financial strain, with increased military spending, higher business taxes, and optimistic budget revenue forecasts. Western investors have already faced challenges retrieving assets from Russia, as seen with JP Morgan seeking to recover shares in Magnit and Deutsche Bank warning about limited access to Russian stocks.
As Western investors navigate these uncertainties, the impact on broad-based investor sentiment remains a lasting concern. The Russian government’s measures to restrict capital flows could have lasting effects on investor confidence in troubled markets.
Our Reader’s Queries
Who are Russia’s current allies?
Discover the countries that are supporting Russia’s invasion of Ukraine. Belarus is a loyal ally of Moscow, while Iran is helping to replenish Russia’s arms stockpile. North Korea has become a newfound ally, and Syria is considered Moscow’s stronghold in the Middle East. China is Russia’s biggest global partner, and India has historical ties to the country.
Why is Russia in two continents?
Russia, which gained independence in 1991 after the fall of the Soviet Union, is a unique transcontinental nation that spans both Europe and Asia. While its historical roots are in Europe, Russia has expanded its territory through imperial conquests into Asia. This makes it a fascinating blend of cultures and traditions from both continents.
How much of Russia is livable?
While much of Russia is deemed uninhabitable due to extreme weather conditions, the southern and western regions boast fertile land that yields productive crops. Unfortunately, the far east is also too cold for crops to thrive.
What countries are friendly with Russia?
Russia has established positive relationships with countries that are considered neutral on the global stage, including India and Vietnam. Additionally, Russia has maintained positive relations with countries that are traditionally aligned with the West, such as Hungary, Serbia, Turkey, Qatar, Egypt, Saudi Arabia, and the United Arab Emirates.