TheChek News Flow

Another week, another gigantic crypto fund. Bain Capital Ventures (BCV) is the latest to join the fray, unveiling a $560 million fund on Tuesday dedicated to crypto investments. The new fund brands itself as Bain Capital Crypto (BCC), separate from BCV, which is a limited partner in the new fund. The crypto fund has backed 12 startups to date and has invested approximately $100 million, Stefan Cohen, managing partner of Bain Capital Crypto, told me in an interview.

The Information reported in October that Bain was raising a $300 million crypto fund. The final amount raised nearly doubles that, indicating strong interest from investors. That demand has helped other venture firms like Andreessen Horowitz raise dedicated, multibillion-dollar crypto funds.

Cohen said Bain wanted to set up a separate crypto fund because “the needs of the founders in [crypto] are just so fundamentally different than the needs of enterprise or consumer software founders.” Crypto founders require more technical advice, an ability to participate in the governance of blockchain protocols and funding across multiple investment cycles, he said.

Included among its investments so far is Variational Research, a decentralized finance startup. BCV has also backed crypto startups from its general funds, including crypto lending startup BlockFi and crypto investment firm Digital Currency Group.

Cohen has moved to the crypto fund from BCV, but most of the team is new to Bain. Alex Evans, the crypto fund’s second managing partner, joined in July from Placeholder, a New York-based venture capital company, to help start the group. The five other team members, many of whom specialize in blockchain research, have all joined since then.

BCC intends to take both equity stakes and “liquid token” positions in startups. The latter financing approach has become more popular among venture funds, given that many crypto companies raise money with token offerings. However, Cohen said that even though it will hold liquid tokens, it won’t actively trade them as a hedge fund would. Instead, it will hold the tokens for the long term.

Crypto Meets Health Care

After I published The Information’s first Crypto Power List last week, I was asked on a call with subscribers if I knew of any crypto startups related to health care. Actually, my colleague Kate Clark published a story Tuesday profiling Love Health, a startup that hopes to use cryptocurrencies to facilitate drug development.

The chairman of Love Health is Ryan Breslow, who founded e-commerce software company Bolt in 2014, and who resigned as CEO earlier this year (he remains executive chairman). JR Rahn, co-founder of a psychedelics company called MindMed, and Ashwath Rajan, who previously co-founded a vending-machine startup, are also co-founders of Love Health.

As for the crypto angle to all this, Rahn told Kate that Love Health’s website will allow potential patients to help choose which drugs should undergo development, and it will reward them for participating with crypto tokens. All of this could enable the intellectual property of a drug to be “owned by the community,” Rahn told Kate.

Outside of Love Health, a few other interesting ventures are blending blockchain with biotech and health care. United Kingdom-based FarmaTrust is using blockchain technology to digitize healthcare, medical device and pharmaceutical data. A dozen pharma companies have also partnered on a project called PharmaLedger, which wants to create a “single source of truth” for healthcare data, with decentralized governance, according to its website.

Conflict drives home the importance of industry to provide safety and security

What a difference a war makes. Barely a year after Sweden’s SEB bank adopted a new sustainability policy that excluded defence stocks from its funds, the group has made a U-turn. From April 1, six funds will be allowed to invest in the defence sector.

SEB says it began to review its position in January as a result of “the serious security situation and growing geopolitical tensions in recent months” which culminated with Russia’s invasion of Ukraine.

The bank, one of the biggest in the Nordic region, was not unique in shunning defence companies. For years now, investors and financial institutions have been backing away from the defence sector for fear of being tainted by controversy over the arms trade.

The exodus has accelerated as pressure intensified on banks and fund managers to abide by guidelines on environmental, social and governance issues. The trend is particularly noticeable in Europe. Thales, the French defence company, has seen the share of equity held by European investors (outside France) halve since 2016. In January, the chief executive of Rheinmetall revealed the company’s longtime German bankers BayernLB and LBBW had decided to stop doing business with the armoured vehicle maker.

But views may be changing in light of the war now raging on the EU’s border. EU proposals last year to label the defence industry as socially harmful appear to have been ditched in a final report published last week on what constitutes socially sustainable finance.

Defence companies had warned that the ESG-driven label could restrict their access to capital, in particular for the small and medium sized companies that make up the supply chain. They pointed to banks in Germany, Belgium, the Netherlands, Sweden and Finland that were already cutting ties with companies generating as little as 5-10 per cent of revenues from defence activities. 

But the Brussels working group on the issue seems to have recognised the contradiction inherent in deeming defence unsustainable, while the EU at the same time calls for greater strategic autonomy in its own military capabilities. Instead it rightly suggests the harmful label should be reserved for those that contravene international conventions on the production, use and deployment of weapons.

The report was prepared for the European Commission, but the European Parliament’s committee on foreign affairs has also stressed the need to ensure any new guidelines do not pose obstacles to the funding of the bloc’s “crucial” defence industry.

Importantly, popular opinion about the toxicity of the defence sector may also be evolving. Germany’s decision to support arms exports to Ukraine, and the subsequent €100bn investment to modernise its military, marked a historic shift. Recent opinion polls in Finland and Sweden have also shown for the first time a majority in support of Nato membership. 

It is tragic that it took a war to drive home the importance of Europe’s defence industry. Surely an important component of the bloc’s ability to provide safety and security to its citizens should qualify for some recognition in the social element of ESG. And without a strong and resilient defence industry, how can Europe achieve its aims of strategic autonomy? 

Of course not all defence companies are equal. Those which do not abide by international treaties on the development and sale of weapons, or which fail to develop appropriate anti-corruption programmes, should rightly be excluded. Not all European defence companies will automatically pass that test. There are also legitimate concerns over where authorised exports eventually end up. There may be a case for strengthening conditions tied to the sale of weapons, by for example stepping up end-use monitoring of equipment.

In light of such concerns it may not be a comfortable decision for those facing ESG pressures to reverse blanket bans on doing business with the defence sector. Certainly it will require more time and effort to judge the merits of each case. But, as analysts at Bank of America noted in a report last week, the Ukraine crisis “reminds us that, like most things in investing, ESG is complicated and nuanced”. 

Perhaps the recent rally in defence stocks in the wake of Germany’s dramatic decision will tempt a few investors and banks into a rethink, for fear of losing out. But that misses the point. The Ukraine crisis has shown in the starkest possible terms the risks of taking a blanket approach to an industry as crucial as defence.

Persian Gulf monarchies have signaled they won’t help ease surging oil prices unless Washington supports them in Yemen, elsewhere

The White House unsuccessfully tried to arrange calls between President Biden and the de facto leaders of Saudi Arabia and the United Arab Emirates as the U.S. was working to build international support for Ukraine and contain a surge in oil prices, said Middle East and U.S. officials.

Saudi Crown Prince Mohammed bin Salman and the U.A.E.’s Sheikh Mohammed bin Zayed al Nahyan both declined U.S. requests to speak to Mr. Biden in recent weeks, the officials said, as Saudi and Emirati officials have become more vocal in recent weeks in their criticism of American policy in the Gulf.

“There was some expectation of a phone call, but it didn’t happen,” said a U.S. official of the planned discussion between the Saudi Prince Mohammed and Mr. Biden. “It was part of turning on the spigot [of Saudi oil].”

Mr. Biden did speak with Prince Mohammed’s 86-year-old father, King Salman, on Feb. 9, when the two men reiterated their countries’ longstanding partnership. The U.A.E.’s Ministry of Foreign Affairs said the call between Mr. Biden and Sheikh Mohammed would be rescheduled.

The Saudis have signaled that their relationship with Washington has deteriorated under the Biden administration, and they want more support for their intervention in Yemen’s civil war, help with their own civilian nuclear program as Iran’s moves ahead, and legal immunity for Prince Mohammed in the U.S., Saudi officials said. The crown prince faces multiple lawsuits in the U.S., including over the killing of journalist Jamal Khashoggi in 2018.

President Biden announced Tuesday a ban on Russian oil imports into the U.S., amid growing calls from bipartisan lawmakers to take action. The U.S. will also ban imports of Russian natural gas and other energy sources, Biden said. Photo: Kevin Lamarque/Reuters

The Emiratis share Saudi concerns about the restrained U.S. response to recent missile strikes by Iran-backed Houthi militants in Yemen against the U.A.E. and Saudi Arabia, officials said. Both governments are also concerned about the revival of the Iran nuclear deal, which doesn’t address other security concerns of theirs and has entered the final stages of negotiations in recent weeks.

The White House has worked to repair relations with two key Middle Eastern countries it needs on its side as oil prices push over $130 a barrel for the first time in almost 14 years. Saudi Arabia and the U.A.E. are the only two major oil producers that can pump millions of more barrels of more oil—a capacity that, if used, could help calm the crude market at a time when American gasoline prices are at high levels.

Brett McGurk, the National Security Council’s Middle East coordinator, and Amos Hochstein, the State Department’s energy envoy, both traveled to Riyadh late last month to try to mend fences with Saudi officials. Mr. McGurk also met with Sheikh Mohammed in Abu Dhabi in a bid to address Emirati frustrations over the U.S. response to the Houthi attacks.

The call with Sheikh Mohammed in early February was expected to focus on ways the two countries could counter Houthi attacks from Yemen.

One U.S. official said the Biden administration has worked diligently to strengthen Saudi and Emirati missile defenses, and that America would be doing more in the coming months to help the two Gulf nations protect themselves. It may not be all the two countries want, the official said, but the U.S. is trying to address their security concerns.

But the Saudis and Emiratis have declined to pump more oil, saying they are sticking to a production plan approved between their group, the Organization of the Petroleum Exporting Countries, and a group of other producers led by Russia. The energy alliance with Russia, one of the world’s top oil producers, has enhanced OPEC’s power while also bringing the Saudis and Emiratis closer to Moscow.

Both Prince Mohammed and Sheikh Mohammed took phone calls from Russian President Vladimir Putin last week, after declining to speak with Mr. Biden. They both later spoke with Ukraine’s president, and a Saudi official said the U.S. had requested that Prince Mohammed mediate in the conflict, which he said the kingdom is embarking on.

White House spokeswoman Jen Psaki said earlier this week that there were no plans to talk to Prince Mohammed anytime soon about oil, and that there were no plans for Mr. Biden to travel to Saudi Arabia.

Saudi Arabia and the U.A.E. forged deep ties with former President Donald Trump, who sided with them in a regional dispute with Qatar, pulled the U.S. out of the Iran nuclear deal that they had opposed, made his first trip abroad to Riyadh in 2017 and stood by Prince Mohammed after the killing of Mr. Khashoggi. But Mr. Trump’s decision not to respond to an Iranian drone and missile attack on major Saudi oil sites in 2019 rattled Gulf partners who have relied for decades on the promise of U.S. security protection. Iran denied involvement in the oil facility attacks.

The rift between Mr. Biden and Saudi Arabia’s crown prince stretches back to the 2020 presidential election, when the Democratic candidate vowed to treat the kingdom as a “pariah” state after a Saudi hit team killed Mr. Khashoggi in 2018 in Istanbul.

There is “very little social redeeming value in the present government in Saudi Arabia,” Mr. Biden said during a presidential debate in 2019.

After taking office, Mr. Biden released a U.S. intelligence report that concluded that Prince Mohammed had approved the plan to capture or kill Mr. Khashoggi, who had been an outspoken critic of the young Saudi ruler.

Prince Mohammed has denied knowing anything about the plot, even though people close to the crown prince were convicted by a Saudi court of taking part in murdering the journalist.

Mr. Biden also publicly castigated Saudi Arabia over its protracted war in Yemen and cut off the flow of some weapons Riyadh could use to target Houthis. The president also reversed a move by his predecessor that put the Houthis on America’s official list of global terrorist groups, a move that Saudi leaders said had emboldened the Yemeni force and thwarted efforts to broker a cease-fire.

On Monday, Ms. Psaki said the president stood by his view that Saudi Arabia should be treated like a “pariah” state and that the leadership had little redeeming social value.

When asked in an interview with the Atlantic magazine released last week if Mr. Biden misunderstood the Saudi leader, Prince Mohammed responded: “Simply, I do not care.”

Prince Mohammed said alienating the Saudi leaders would hurt the U.S. president. “It’s up to him to think about the interests of America,” he said. “Go for it.”

One U.S. official acknowledged that Prince Mohammed is the key Saudi decision maker, and that the Biden administration will have to find ways to work with the crown prince on everything from energy policy to normalizing relations with Israel.

Along with Saudi Arabia, the U.A.E. has urged the U.S. to put the Houthis on its list of terrorist groups and to send more military aid to help defend the country from more attacks. But the U.S. hasn’t moved to address those Emirati concerns, according to Gulf officials.

Last month, Gen. Frank McKenzie, the head of U.S. Central Command, flew to Abu Dhabi for a series of meetings with Emirati leaders to discuss ways to beef up security in the wake of the Houthi missile strikes. Gen. McKenzie wanted to meet with Sheikh Mohammed, but was unable to get time with the Emirati leader, according to a Middle East official.

Last week, Yousef Al Otaiba, the U.A.E. ambassador to the U.S., said that relations between the two countries were strained.

“It is like any relationship,” he said in Abu Dhabi. “It has strong days where the relationship is very healthy and days where the relationship is under question. Today, we’re going through a stress test, but I am confident that we will get out of it and get to a better place.”

Entertainment-industry titans Barry Diller and David Geffen made purchases just days before the merger was announced

Federal prosecutors and securities regulators are investigating large bets that Barry Diller, Alexander von Furstenberg and David Geffen made on Activision Blizzard Inc. shares in January, days before the videogame maker agreed to be acquired by Microsoft Corp. MSFT -1.10% , according to people familiar with the matter.

The three men have an unrealized profit of about $60 million on the options trade, based on the recent Activision share price of around $80, according to the people.

Messrs. Diller, von Furstenberg and Geffen bought options to purchase Activision shares at $40 each on Jan. 14 in privately arranged transactions through JPMorgan Chase & Co., the people said. Activision shares were trading around $63 at the time, meaning the options were already profitable to exercise, or “in the money.” Option holders could reap more if Activision’s stock price rose.

The Justice Department is investigating whether any of the options trades violated insider-trading laws, the people familiar with the matter said. The Securities and Exchange Commission is separately conducting a civil insider-trading investigation, the people said.

Mr. Diller said in an interview that none of the men had material nonpublic information about the Microsoft MSFT -1.10% -Activision deal. He confirmed they had been contacted by regulators.

“It was simply a lucky bet,” he said. “We acted on no information of any kind from anyone. It is one of those coincidences.”

Mr. von Furstenberg had been “buying Activision stock prior to that and the thought was that Activision at some point would either go private, or would be acquired at some point,” Mr. Diller said.

Mr. von Furstenberg, who is Mr. Diller’s stepson, couldn’t be reached for comment. Mr. Geffen didn’t immediately respond to requests for comment. Spokespeople for the Justice Department and SEC declined to comment.

Activision disclosed on Jan. 18 that Microsoft would acquire the company for $95 a share. The shares ended that day at $82.31, gaining 26%. On Tuesday, Activision shares rose 48 cents to $81.03 on Nasdaq.

JPMorgan reported the trades to law enforcement after the deal became public, the people said. Under the terms of a criminal settlement it reached in September 2020 related to market-manipulation claims, JPMorgan is required to disclose to law enforcement evidence or concerns about misconduct over the duration of the three-year agreement. JPMorgan declined to comment.

Call options give a trader the right to buy shares at a specific price by a certain date. The three men haven’t yet exercised the options, which don’t expire until early next year, the people said.

The traders appear to have spent around $108 million to acquire the right to buy 4.12 million Activision shares, the people said. Those options are now valued at around $168 million, based on recent trading prices. The value of the options would rise further if the deal closes at the stated per-share price of $95, which Microsoft has said is expected after midyear. If the men hold the options through a closing at that price, their profit stands to surpass $100 million, the people said.

Mr. Diller has served on the board of directors of Coca-Cola Co. with Activision Chief Executive Bobby Kotick. Coca-Cola announced this month that Mr. Kotick would step down from its board this year. Mr. Diller described Mr. Kotick as “a long time friend.” Activision declined to comment. Microsoft declined to comment.

Mr. Kotick began discussing a potential deal with Microsoft in November, according to a proxy statement filed with the SEC. He solicited competing offers from three other companies, none of which made formal offers, according to the filing.

Activision’s board approved the deal on Jan. 17, and disclosed the merger agreement the following day.

The producer of hit game franchises including World of Warcraft and Candy Crush has faced state and federal investigations over how it handled workplace-harassment allegations. Activision has announced moves it says are aimed at improving its workplace and has fired or pushed out dozens of employees as part of an internal investigation. The company has said it is cooperating with an SEC investigation focused on how it disclosed employment problems such as sexual-harassment claims to investors.

The option trades were arranged privately by JPMorgan, rather than purchased on U.S. options exchanges. The pricing of privately placed options is likely to be influenced by listed-option pricing but may not be the same, said options traders.

The individuals acquired the options because they believed Activision was undervalued at the time and that its shares would eventually rebound, a person familiar with their thinking said. They didn’t have a particular strategy or trigger in mind to exit the trade, the person said.

Options contracts struck at similar prices and for similar terms had been sparsely traded on U.S. exchanges. A week ahead of the Microsoft announcement, there were only around 170 outstanding call-option contracts tied to Activision Blizzard with a strike price of $40 and the same January 2023 expiration date, according to Cboe Global Markets data.

Traders who use options are often looking to profit from a swing in share prices. Because options typically cost less than shares, using them can amplify gains when traders bet right, particularly when they use options that are “out of the money”—the trading term for bets that wouldn’t pay off at the market price at the time the options are purchased. Options that are in the money at the time of their purchase offer less of this leverage, because there is less risk.

In this case, the bet paid off handsomely once the merger was announced. Options activity on U.S. exchanges tied to Activision Blizzard shares exploded on the day of the merger, with more than 700,000 contracts trading.

One such contract, conferring the right to buy 100 Activision shares by next January, would have cost roughly $2,700 to purchase on the Friday before the merger announcement. By Tuesday, the day of the announcement, their value would have risen more than 60% to trade at more than $4,300, according to data from Cboe Global Markets.

Messrs. Diller and Geffen, entertainment-industry moguls who once worked together in the mail room at the William Morris agency, are longtime friends. In a lengthy profile of Mr. Diller published by Forbes in 2019, Mr. Geffen was quoted saying: “I’ve never seen him be anything but successful. To bet against him would be a fool’s errand.”

Mr. Diller is married to fashion designer Diane von Furstenberg. Alexander von Furstenberg, the founder and manager of family office Ranger Global Advisors, is her son from an earlier marriage to Prince Egon von Furstenberg.

The performance of Russian troops on the ground may have come as a surprise to China’s People’s Liberation Army

As Russia’s military might struggles in the face of Ukrainian resistance, China’s People’s Liberation Army is watching events on the ground with particularly close attention.

For the PLA, the Russian operations — which Beijing refuses to call an invasion — are live lessons in the kind of warfare Chinese troops have not experienced in almost half a century. Beijing fears that, not having been in real combat since the 1979 border war with Vietnam, its military is suffering from ‘peace disease’, a lack of battlefield experience and fighting spirit.

For decades, Chinese military scholars and analysts have therefore been studying conflicts around the world looking for ‘Chinese lessons from other people’s wars’, as a landmark book published a decade ago called it.

Those lessons have included the importance of air campaigns as demonstrated by the US in the 1991 Gulf war, the use of missiles to knock out an adversary’s command and control or air defence systems in various US military operations, and a variety of operations in the 1999 Kosovo war.

“The Chinese military has made a significant effort to look at the modern conflicts involving the US or Russia,” said Ian Burns McCaslin, an expert on the PLA’s emulation of foreign militaries who is now enrolled in a PhD programme at Tamkang University in Taipei. “We know they looked at the Russian experience in the conflict in Syria, and we can expect them to look at Ukraine as well.”

The PLA has built the observation of other militaries’ practices into its training and exercise regimes. It has set up a programme for creating forces “intended to imitate potential adversaries,” according to a paper he co-authored.

According to Chinese military scholars, a war involving Russian troops could hold more important lessons than any other conflict.

“Our armed forces were formed after the example of the Soviet Union’s armed forces, we have for a long time been acquiring most of our weapons from Russia, and we are engaged in close military exchanges with Russia,” said a retired PLA officer at the Academy of Military Sciences who requested anonymity. “A considerable number of our young officers have spent time in Russian academies, we have been exercising together and learning about each other’s command and control structures. So how they perform in battle is very relevant to us.”

Given these close links, some of the events on the ground in Ukraine might have come as a shock. According to information released by the Ukrainian side and by the US government, Russia’s ground forces appear to have run into severe problems with communications and logistics. Convoys of armoured vehicles are said to have run out of fuel, Russian soldiers have been left stranded not knowing directions, and key Russian equipment such as Pantsir anti-aircraft missile trucks have been abandoned by their crews.

For Beijing, which has had an ambivilant attitude towards the war in Ukraine, this is potentially alarming. Russia’s involvement in conflicts over the past 15 years, such as the 2008 Georgia war, its 2014 invasion of Crimea and the war in Syria, created the impression that its forces were highly organised. China has even modelled part of its military structure on the Russian example. Under the latest round of military reforms, which President Xi Jinping kicked off in 2015, he created the Strategic Support Force, in charge of space, cyber and electronic warfare, tasked with helping other branches of the military with navigation and communications.

“The establishment of the PLA Strategic Support Force seems to have been inspired by the Russian model,” Major General Mandip Singh, an Indian retired army general, wrote in a paper on how the PLA has been learning from Russia. “China’s military officers and strategists continue to be schooled in Russian thinking on ‘new generation warfare’ and have identified the Russian strategy as a key battle-winning factor.”

Xi also followed Putin’s example in concentrating command powers in the hands of the top military leader.

Russian ground troops’ communications troubles in Ukraine highlight the risks of a centralised command structure on the battlefield as it can leave soldiers helpless when they are cut off. Although the PLA is experimenting with devolving more command functions to lower ranks in exercises, analysts observe that the Chinese Communist party’s concerns over political control and loyalty is hindering that process.

Military experts caution that it is too early to draw conclusions. “It is vital for us to observe the operation in Ukraine, but everything will be judged based on success or failure of the operation in the end,” said the Chinese military researcher.

Business tycoon, one of Russia’s richest men, was hit with sanctions by the EU

International lenders including Citigroup, ING and JPMorgan are reviewing their relationship with telecoms group Veon, after the owner of its largest shareholder and one of Russia’s richest men, Mikhail Fridman, was hit with sanctions by the EU.

LetterOne, the investment vehicle set up by Fridman in 2013 and in which he owns a significant stake, holds a 48 per cent stake in Veon, a Dutch telecoms group that makes most of its revenue from Russia.

In March last year, Veon secured a $1.25bn revolving credit facility from 10 banks, co-ordinated by Citi and including Crédit Agricole, JPMorgan, Société Générale, Barclays and Raiffeisen. Last month, the company drew $430mn from the credit line to repay a bond that matured, leaving $820mn available.

The parent company and its subsidiaries also have other outstanding loans from several western banks, including facilities to Veon’s Ukrainian subsidiary, according to filings.

That facility — as well as other loans to both the parent company and subsidiaries — are being reviewed by Citi, ING and their fellow lenders to ascertain whether they comply with internal rules around individuals placed under sanctions, as well as those set out by the US Office of Foreign Assets Control, according to people with direct knowledge of the matter.

Citigroup, ING and JPMorgan declined to comment, as did Crédit Agricole, SocGen, Barclays and Raiffeisen Bank.

The situation with Veon is indicative of a looming problem for the financial sector as it scrambles to ascertain its exposure to oligarchs and businessmen placed under sanctions by western governments — and the potential damage to their reputations if they do not cut ties.

Last week, Fridman and Petr Aven stepped down as directors from LetterOne and had their stakes “frozen” following the EU’s imposition of sanctions against them in the wake of Russia’s invasion of Ukraine.

LetterOne is arguing that the two men own less than half of the company, which could insulate its business portfolio — including Veon; food and dietary supplements group Holland and Barrett; Turkish telecoms group Turkcell; and Ukrainian mobile provider Kyivstar — from the secondary effects of western sanctions.

LetterOne said in a statement that the company was “not affected by sanctions”, adding that Fridman and Aven no longer had any contact or benefit from the business. “We are confident that these are the right decisions to protect the 120,000 jobs L1 investments support,” it said.

On Monday, the co-founders of LetterOne promised to pay all of their dividends to ongoing relief efforts in Ukraine “for the foreseeable future”, as well as $150mn in cash.

Veon said in a statement that “while sanctions have impacted certain shareholders, the impact of those individual sanctions does not flow down to Veon in a manner that subjects it to sanctions”. 

A number of European and US financial services companies have suspended operations in Russia because such links have become politically toxic as the war in Ukraine intensifies.

Payment networks Visa, Mastercard and American Express have halted all transactions in the country, while over the weekend accountants EY, PwC and KPMG cut loose their local units and severed ties with ​​any Russian government clients, state-owned enterprises or sanctioned entities.

Veon’s share price has lost about 70 per cent of its value over the past month, reaching a low of 26 cents last week.

In a report on March 4, JPMorgan’s own credit analysts said that Veon’s “ability to maintain sufficient cash flow on an ex-Russia and Ukraine basis is not obvious” and a refinancing of its $5.5bn debt pile would be “challenging in the current backdrop”.

They also noted that Kyivstar in Ukraine is “Veon’s most cash-generative international operation” and “its future is uncertain”. The analysts cautioned investors against buying its debt.

On Friday, Fitch downgraded Veon’s credit rating to a junk grade of B+ from the previous investment grade BBB-, citing its limited access to cash in Russia and Ukraine.

However, the stock made a small recovery after Veon announced that it had $2.1bn in cash and deposits, including $1.5bn in US dollars and euros, held “in bank accounts, money market funds and on-demand deposits at a diversified group of international banks from the European Union, the United States and Japan”.