Fridman/LetterOne: for the love of Mike
A drawn-out court case could damp investor appetite for the Russian’s energy business
Oligarchs launched a land grab for assets previously owned by the state in the early years of post-Soviet Russia. Elbows and business practices were sharp. Mikhail Fridman emerged as one of Russia’s richest men. He has maintained links to Russia while overseeing growing investments in Europe. Now he faces questions in a Spanish court over alleged tactics reminiscent of Russia’s “wild east”.
It is an unwelcome distraction for the billionaire who has been carving out a new life running his investment fund LetterOne from London. He hopes to nail down his place in Europe’s business elite by floating a big energy business in Frankfurt next year. A drawn-out court case could damp the appetite of public investors to back the deal.
The business has a mooted value of €20bn, though an implied earnings multiple in line with oil majors looks optimistic. The company was formed through the merger of Mr Fridman’s upstream energy business DEA with BASF’s Wintershall energy division.
This put to bed a 2015 spat with British authorities by giving Mr Fridman a share of ownership in Wintershall’s UK assets. DEA was forced to sell its UK North Sea assets over fears Mr Fridman would be included in US sanctions. Even the presence of John Browne, a City grandee and former BP executive, as executive chairman of Mr Fridman’s energy division could not mollify the authorities. But sanctions never materialised.
Mr Fridman’s latest controversy concerns Zed World Wide. Spanish prosecutors are accusing Mr Fridman of illegally using his influence to choke off revenues to the mobile business so he could buy it on the cheap. Mr Fridman maintains his innocence, saying the claims are false and lack credibility.
Such tactics are hardly the exclusive domain of Russian businessmen, anyway. Some high-toned Brits and Americans have been accused of it too. But the allegations are amplified by Mr Fridman’s colourful back story. London has long been a place for wealthy foreigners to reinvent themselves. Mr Fridman and his business partners are the latest to make that attempt.