Vulture Investors Hover Russian Assets Amid Potential Sanctions

For years, Roman Abramovich ignored attempts to buy Chelsea Football Club, even though the UK made it difficult for him on occasion to visit London to see his team.

Now, after the invasion of Ukraine by RussiaThe billionaire is looking to sell the club, though his advisers want at least 3 billion pounds ($4 billion).

In the world of the ultra-rich, the phones are ringing these days to talk about buying sanction-risk assets at near-bargain levels. Opportunistic investors and real estate agents ask: Who is selling and at what price?

One call came from UK staff at HIG Capital, a Miami-based private equity firm owned by billionaires Sami Mnaymneh and Tony Tamer, according to a person with knowledge of the matter.

Another firm making the rounds is Optimus Capital, a London-based asset manager that works with wealthy individuals and family wealth managers, said the person, who asked not to be identified because the information is not public. Representatives for HIG and Optimus did not respond to requests for comment.

The consultations, which come just a week into the conflict, highlight the fast-moving nature of a geopolitical crisis that has seen the country of Vladimir Putin kicked out of the global financial system and wiped out nearly $90 billion of the fortunes of Russia’s wealthiest elites.

On Wednesday, Russia’s central bank closed share trading on the Moscow stock exchange for the third day in a row, the longest period since the country’s crisis in 1998. The London Stock Exchange also suspended dozens of Russian depository receipts after that the Dow Jones Russia GDR fell 98% in two weeks.

However, the assets facing the most rigorous scrutiny from government leaders are real estate, private jets and superyachts owned by Russian oligarchs.

On Wednesday, the US Justice Department announced details of a task force called “KleptoCapture” that will seek to enforce sanctions and export restrictions and seize such luxury assets, following a similar move by the UK.

“We’re going after your yacht. We’re going after your private plane. That’s the key messageDeputy Attorney General Lisa Monaco said in an interview Wednesday with Emily Chang of “Bloomberg Technology.”

Hotspot

The UK has become a hot spot for wealthy Russians in recent years, with many drawn to the English capital for its abundance of luxury real estate, as well as the city’s private hospitals and schools. . Popular areas include Eaton Square in Belgravia, sometimes called “Red Square”, and St. George’s Hill in Surrey, where most houses are priced in excess of £10m.

But now, some Russian London real estate owners are having trouble refinancing their mortgages, according to a person familiar with the matter. Banks are concerned about their exposure to Russian people and are refusing to provide financing, forcing owners to consider selling, said the person, who asked not to be identified, citing confidentiality agreements.

Abramovich, who has not been sanctioned by the UK, is looking to sell his London properties, Chris Bryant said. The property he was referring to is a mansion in Kensington Palace Gardens, according to a person familiar with the matter, and the flat he is referring to is a penthouse apartment on Chelsea Waterfront.

Chelsea sale

As for Chelsea FC, the Russian billionaire issued a statement on the club’s website on Wednesday saying he would sell the team and has instructed the board to set up a charitable foundation that will receive all net proceeds from the sale.

“The foundation will be for the benefit of all the victims of the war in UkraineAbramovich said in the statement. “Know that this has been an incredibly difficult decision to make and it pains me to part with the club in this way.”.

The other obvious trophies of Russia’s ultra-rich are their superyachts, symbols of their extravagant wealth. Some 7-10% of the world’s fleet is owned by Russians, according to industry watcher Superyacht Group. But they usually take several months to sell, at the very least.

It is not clear whether the Russian elites would want to part ways with them anyway. The four largest luxury yachts sailing the Maldives right now are Russian-owned, according to an analysis of vessel data by Bloomberg News. The vessels are owned by or linked to steel tycoon Visctor Rashnikov, his fellow billionaire Aleksey Mordashov, aluminum tycoon Oleg Deripaska, and banker Andrey Kostin.