H2O backing helped Windhorst settle suit tied to ex-Putin minister
London-based asset manager has been one of the biggest lenders to the German entrepreneur
Financing from H2O Asset Management helped Lars Windhorst settle a lawsuit from a vehicle linked to the former energy minister of Russian president Vladimir Putin.
H2O’s ties to Mr Windhorst hurt the London-based fund manager in June when the Financial Times revealed the scale of its funds’ exposure to illiquid bonds linked to the controversial German entrepreneur.
For Mr Windhorst, the backing of H2O, a subsidiary of French bank Natixis, proved useful at the end of 2017 when he was embroiled in a €66m lawsuit that had frozen his assets, including those held at Swiss private bank Julius Baer, expensive wines and a private jet.
In the lawsuit, Romanello, a Belize-registered investment vehicle, sued Mr Windhorst in London, claiming that he had failed to honour a series of trades of “illiquid” bonds and stocks.
Five people familiar with the matter told the FT that Romanello was linked to Igor Yusufov, who was energy minister during Mr Putin’s first term as Russian president.
Romanello had pursued its claim against Mr Windhorst in a particularly forthright manner. With the help of heavyweight litigation specialist Quinn Emanuel, Romanello achieved a worldwide freeze of Mr Windhorst’s assets,
In December 2017, Mr Windhorst, whose businesses include luxury lingerie maker La Perla and a stake in German football club Hertha BSC Berlin, settled the lawsuit with Romanello. The settlement terms were confidential.
In the run-up to the settlement, Mr Windhorst’s business empire had been propped up by a series of rescue financing deals where H2O played a significant role. These included Mr Windhorst raising €500m through a bond from an entity called Chain Finance in August 2017. H2O bought nearly half of the bonds by the end of that year.
The bond issued by Chain Finance helped Mr Windhorst to settle the disputed financing agreements at the heart of the litigation he was facing. An accompanying document explained it would be used to purchase bonds, equity instruments, structured notes and pooled investment vehicles, as well as allowing Chain Finance to grant “unsecured loans to individuals and companies”.
After settling the lawsuit with Romanello, Mr Windhorst also signed a deal to potentially pursue investments with the vehicle, according to people familiar with the negotiations.
In its lawsuit, Romanello said that the deals were arranged between Mr Windhorst and a Switzerland-based middleman acting for the investment vehicle.
Romenello said the arrangement was that it would buy the assets from Abu Dhabi-based brokerage ADS Securities on the promise that ADS would buy them back before a set date at a pre-arranged price. Mr Windhorst later agreed to buy back the bonds himself, according to the lawsuit.
ADS handled several transactions for the German financier and built up substantial exposure to him in 2016.
A spokesman for Mr Yusufov did not provide a response for publication. Spokespeople for Mr Windhorst, H2O and ADS Securities declined to comment.
The people familiar with the matter said that the investment vehicle was connected to Mr Yusufov, who previously served on the board of Russia’s state-owned energy company Gazprom. A lawyer who has acted for the Yusufov family signed the co-operation agreement with Mr Windhorst, seen by the FT, which laid out plans to invest together in the “oil & gas and energy sector in Russia, CIS and Europe”.
Mr Yusufov already has several oil and gas investments on the Yamal peninsula in northern Russia through his primary investment company Corporation Energy.
His son, Vitaly, previously headed the Moscow branch of Nord Stream, an international consortium that built a natural gas pipeline from Russia to Germany. Nord Stream’s chief executive Matthias Warnig, an ex-Stasi officer and close friend of Mr Putin, is an acquaintance of Mr Windhorst who previously spoke at a dinner he hosted.
Russia was a familiar hunting ground for the serial dealmaker Mr Windhorst, who once rented an office two floors above Mr Warnig’s in a business centre across the street from the Kremlin. Artem Volynets, the former lieutenant of aluminium magnate Oleg Deripaska, represented Mr Windhorst’s interests in Russia from 2014.
Mr Volynets fronted an attempt by Sapinda, Mr Windhorst’s investment company, to renegotiate a debt restructuring at Petropavlovsk the following year, after building a significant stake in the Russian gold miner.
Mr Volynets was a director of Luxembourg-registered Sapinda Eurasia, along with Claus Nouveau-Nikolajsen, a now deceased executive of ADS Securities. Mr Nouveau-Nikolajsen was also named in Romanello’s lawsuit, which said the Danish executive was involved in the initial agreement to buy back the Windhorst-linked bonds.