Volvo Trucks’ Russian assets transferred to local investor
Swedish company latest group to exit country following its invasion of Ukraine
The Russian assets of Volvo AB, the Swedish truckmaker, are to be transferred to a local investor, according to a Russian ministry of trade statement reported by the Interfax news agency.
A Volvo AB representative told the Financial Times the transaction was a “voluntary divestment” as a result of the group’s working to liquidate its assets in Russia after the country’s full-scale invasion of Ukraine.
The statement did not name the new owner, but Russia’s company registry showed that control of several Volvo AB subsidiaries passed this week to Igor Kim, the main shareholder in Expobank, who has been involved in multiple transfers of ownership of foreign companies, and his business partners.
It was unclear on Friday whether Volvo had received any proceeds from the deal. The transaction’s complexities underline the challenges facing foreign companies still doing business in Russia either because of reluctance to leave or because of the gradually increasing restrictions imposed by the Russian authorities on divestments.
Volvo suspended all its sales, service and production activities in Russia on February 28 last year, four days after the full-scale invasion of Ukraine. Volvo’s main asset in Russia, which accounted for around 3 per cent of group net sale before the suspension, was a factory in Kaluga, 180km south-east of Moscow, that produced around 3,000 vehicles annually under the Volvo and Renault brands.
Volvo booked a provision of SKr4.1bn in April 2022 for its Russian business, saying that it had total assets in the country of about SKr9bn.
A group representative told Vedomosti newspaper last October that it was considering selling the Russian business because it could not currently conduct operations in Russia. It had begun to “adapt” the business and was making employees redundant, the representative said.
Control of several Volvo Group subsidiaries in Russia transferred on Wednesday to Kim, Expobank’s main shareholder, and his business partners, information from the Russian company registry shows.
On Thursday, Expobank’s first deputy chair Alexey Sannikov was appointed chief executive of the Kaluga plant.
Expobank grew out of the former Russia business of Barclays, the UK bank, and has been owned by Kim since the UK bank left the Russian market in 2011. Expobank had been involved in financing a number of exit deals, several people from the Russian banking industry told the FT.
While many of Russia’s top banks have had their wings clipped by western sanctions, lower-profile banks such as Expobank, the 41st largest bank in Russia by assets, have filled the void. Expobank has not faced any restrictions.
Natasha Tsukanova, managing director of Xenon Capital, which is advising on several exit deals, said that arranging financing to buy exiting foreign companies had become a “complex challenge” for Russian buyers.
“With access to international capital markets all but non-existent, Russian buyers often resort to smaller lenders,” she said.
Expobank did not immediately respond to a request for comment.
Earlier this year, Russian officials said that various investors, including companies from Belarus and China, were queueing up to buy the Volvo AB assets.
“Taking into account the intensity and status of our relationship, the Russians are ready to essentially give us this plant for free,” the Belarusian ambassador to Russia said in July.
However, Russian prime minister Mikhail Mishustin subsequently advised the Belarusian government to contact their Russian counterparts because decisions had already been made about the business.