20 Oct 2022 11:30

Freedom Holding selling Russian assets to Freedom Finance deputy CEO

MOSCOW. Oct 20 (Interfax) - Freedom Holding Corp. has entered into an agreement to sell its Russian subsidiary, Investment Company Freedom Finance LLC (Freedom Finance, Freedom RU), and Freedom RU's subsidiary FFIN Bank LLC to Freedom Finance deputy CEO and board director Maxim Povalishin, the group said in a press release.

The transaction is subject to the approval of the Central Bank of Russia and is expected to close in the coming months, the company said.

Povalishin will pay cash in the amount of about $33 million and be assigned the company's obligation to Freedom RU under an outstanding deferred payment in the amount of about 6.6 billion rubles (currently about $107 million) that resulted from the purchase by the company of Freedom RU's Kazakhstan subsidiary Freedom Finance JSC (Freedom KZ), with its subsidiaries, from Freedom RU as part of a corporate restructuring.

Completion of the purchase of Freedom KZ is subject to regulatory approvals and is expected to occur prior to the closing of the sale of the Russian subsidiaries.

Povalishin plans to use his personal funds, including from sales of stock he was granted while an executive at Freedom RU, to finance the cash component of the purchase price.

Freedom Holding announced plans to divest its Russian assets in early June against the backdrop of the conflict in Ukraine and their impact on financial markets. It was initially proposed that the holding's principal owner Timur Turlov would first buy the assets and then in a year to 18 months resell the Russian business under a different name to management or another "acceptable" buyer.

However, after studying clarifications of sanctions issued by OFAC regarding investments and divestment of Russian legal entities by U.S. residents, the company abandoned this plan.

In January 2022, Freedom Finance was the ninth largest operator on the Moscow Exchange , with turnover of 255 billion rubles. The broker had 137,500 clients. In addition, as of March 31, Freedom was a shareholder of the SPB Exchange, although it had reduced its stake in the past year, and the company is an active participant in trading on this exchange.

FFIN Bank was the 180th largest bank in Russia at the end of 2021, with assets of 8.7 billion rubles and capital of 1.6 billion rubles, according to the Interfax-100 ranking.