Russia’s President, Vladimir Putin, gave the go-ahead for Baring Vostok (the biggest shareholder of Kazakhstani fintech group Kaspi.kz) to sell some of its major Russian businesses. This is part of a plan to split the company into two parts. One of the businesses mentioned is the Ozon marketplace, which started operating in Kazakhstan in 2021. Vostok Investments will pay Baring’s parent company $150mn and will also take on some debts worth $140mn.
The approval marks the latest phase in a deal aimed at dividing Baring Vostok’s operations into two segments: 1) the international; and 2) Russian businesses. The Russian segment, or Vostok Investments, will be overseen by Baring Vostok’s local executives, spearheaded by Elena Ivashentseva, a former senior partner of the firm.
The newly formed entity is projected to acquire stakes in Ozon, Renaissance Insurance, Solopharm, SkyEng (an online English school), Familia (a discount network), VkusVill, and six other firms. Conversely, the international segment will be rebranded as Baring Private Equity and will inherit Michael Calvey’s stakes in Kaspi.kz, Kolesa.kz, and BlaBlaCar. Calvey will be the sole proprietor of this new firm.
Deal details
As part of the deal, Vostok Investments is expected to remit $150 mn to Baring’s parent structure and assume liabilities worth $140 mn. According to The Bell, a Russian media outlet, the presidential administration was not in favor of the deal as it preferred a Russian businessma to take over Ozon. This individual should have been someone with close ties to the Kremlin, such as Ivan Tavrin, a former Megaphone head and a top executive in the USM holding controlled by Alisher Usmanov, or the head of the VK holding (son of Vladimir Kirienko, deputy head of the presidential administration). Some experts even suggested that Baring Vostok’s assets might have been nationalized if the fund had not reached an agreement with Russian authorities.
Asset distribution
Initially, the two parties agreed to hand over 10 out of 12 assets approved by a special governmental commission, established two years ago when Western countries imposed anti-Russian sanctions. The issue with the remaining two companies – Ozon and Renaissance Insurance – was that challenging that Putin himself reviewed the situation.
Baring Vostok holds a 27.7% share in Ozon, while a 31.8% stake is owned by AFK Sistema. The fund’s share in Renaissance Insurance is 13.7%, with the remaining shares distributed among a broad range of stakeholders.
The value of Baring Vostok’s share in Ozon was the main stumbling block as Vostok Investments wanted to purchase the stake for $60,000 instead of the market value of $1.37 bn. The RBK news agency reports that authorities approved Baring Vostok selling its stakes in Ozon and Renaissance Insurance under a special term: Vostok Investments is obliged to resell Ozon to a Russian buyer, who would be free of sanctions. No timeline for the deal was provided.
Baring Vostok’s assets were divided following Russia’s full-scale invasion of Ukraine and the criminal prosecution of Calvey in Russia. In 2019, he was accused of financial fraud as the fund’s First Collection Bureau (FCB) failed to pay its debt to the Bank Vostochny. The debt arose after the bank had transferred its treasury shares, acquired from holders, to the Cyprus division of BKS, a Russian broker.
The financial institution stated that it would repurchase them through the FCB, which obtained a loan of $26.8mn from the bank. Several years later, Calvey allegedly convinced executives of Vostochny to cover this debt with shares of the IFTG from Luxembourg. According to investigators, these stocks were valued at just about $6,400, while Calvey allegedly embezzled all the remaining money.
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