$1.5 billion IPO for firm controlled by Putin ally tied to Manafort
The Russian energy and aluminum company EN+, which is controlled by a member of President Vladimir Putin’s circle of favored businessmen, said Friday that it had raised $1.5 billion in an initial public offering seen as a major test of investors’ appetite for Russian assets.
The results of the listing were at the bottom end of EN+’s expectations, but the offering was nonetheless one of the largest by a Russian company since the Kremlin drew international condemnation and sanctions by annexing Crimea in 2014. It is also the latest sign that some investors have not been deterred by the steady drumbeat of allegations linking President Donald Trump’s campaign to the Russian government.
The offering may draw attention for using the London Stock Exchange, where listing rules are less stringent than in New York, for a transaction that had the effect of funneling money to a Russian state bank that is sanctioned in both the United States and European Union, even though EN+ is not sanctioned.
The offering’s prospectus said that EN+ intended to use $942 million out of the $1.5 billion it raised to pay down a loan from VTB Bank. The offering is intended, it said, to “repay in full the loan provided to it by VTB.”
Loan repayments allowed
The United States sanctioned the bank on July 29, 2014, 12 days after a civilian airliner was shot down over eastern Ukraine, killing all 298 people on board, most of whom were Dutch citizens; safety investigators and Dutch prosecutors determined that a Russian anti-aircraft missile hit the plane.
The sanctions prohibit Western companies from extending new long-term credit lines to VTB and other Russian banks, but allow loan repayments.
EN+ itself has links to the scandal over Russian interference in the U.S. presidential election. The company is controlled by Russian oligarch Oleg Deripaska, a confidant of the Russian president who once had close ties to Paul Manafort, the former Trump campaign manager who was charged this week with money laundering as part of the special counsel inquiry into potential collusion between Russia and the Trump campaign. Manafort has pleaded not guilty.
Deripaska, an orphan from a small village in southern Russia, muscled his way into the aluminum business in Siberia in the 1990s. At the time, the industry was in bloody turmoil as organized crime figures and venal local officials fought in what became known as the Aluminum Wars.
Despite his humble background, Deripaska is closely entwined with the Moscow elite. As an example of his proximity to power, analysts of the oligarchy have pointed out that he is married to the step-granddaughter of the late former Russian President Boris Yeltsin; Deripaska has played down the tie as irrelevant to his business activities.
Decade-old Manafort ties
Deripaska was never charged with a crime in Russia over the Aluminum Wars, but the United States has for years denied him a visa, suggesting something unseemly in his ascent in the Siberian aluminum industry. It was in an effort to solve this earlier problem in Washington that a decade ago he reached out to a business partner of Manafort, Rick Davis, for lobbying.
Manafort and Deripaska set up an investment company to buy television stations in Ukraine that eventually unraveled in a $19 million lawsuit filed by Deripaska in the Cayman Islands, court records show. But now, those decade-old ties to Manafort have become a focus of attention in the Trump-Russia investigation.
During the presidential campaign last year, Manafort had asked, through an intermediary, whether Deripaska might resolve a financial dispute in exchange for “private briefings” about the Republican Party presidential campaign, The Washington Post has reported, citing email exchanges. Deripaska dismissed the emails as just scheming by “beltway bandits,” the Post reported.
The Russian businessman offered this year to cooperate with congressional investigations of Russian meddling in the 2016 election in the United States, but U.S. officials were said to be unwilling to accept his conditions, which included a request for full immunity.