By Bloomberg News
Roman Abramovich was in his element.
Chelsea FC had just won the Club World Cup and the billionaire owner was on the pitch, celebrating with the players and coach Thomas Tuchel.
It’s not gone to plan since that balmy February evening in Abu Dhabi.
Just weeks later, Abramovich, 56, was forced to put his prized London possessions up for sale after Russia invaded Ukraine. UK lawmakers, following decades of Russian investment and involvement in business, real estate and sports, set out to pressure those perceived as having ties to President Vladimir Putin — and no one in Britain was as high profile as Abramovich.
It only got worse for the billionaire, who made his vast fortune in oil and metals. In March, he suffered symptoms of suspected poisoning after engaging in futile peace talks between Ukraine and Russia. (It was unclear who was behind the attack or what type of poison might have been used, people familiar with the situation said at the time.) He was sanctioned by the European Union, and $US6 billion in hedge fund investments, made by US-based Concord Management, were effectively frozen. Just this month, Canada said it intends to seize $US26 million ($37 million) in assets from his Granite Capital Holdings to help fund Ukraine’s reconstruction.
‘The influence that these elites once had abroad is waning, and their options regarding where to park their wealth have become increasingly more limited.’Liana Semchuk, Sibylline intelligence analyst
Abramovich’s wealth fell more than 50 per cent to $US7.8 billion this year, and some of that is now illiquid, according to the Bloomberg Billionaires Index. He almost certainly won’t see any proceeds from Chelsea’s sale to US investors. What’s more, his ability to roam the world by private jet or superyacht and snap up trophy properties is now curtailed.
A representative for Abramovich didn’t respond to a request for comment.
He is the largest decliner of the approximately two dozen Russian billionaires tracked by Bloomberg, some of whom made their initial fortunes when Russia privatised state-run industries in the 1990s. In total, their net worth has declined almost $US95 billion this year, or more than $US330 million a day since the Ukraine invasion.
Those impacted, such as LetterOne founders Mikhail Fridman and Petr Aven, held significant portions of their wealth outside of Russia, including in private equity or property. The declines go beyond just money.
“The influence that these elites once had abroad is waning, and their options regarding where to park their wealth have become increasingly more limited,” said Liana Semchuk, a Eurasia intelligence analyst at advisory firm Sibylline in London. “The haven that many European jurisdictions offered no longer exists in the same way, and ultimately this means that their wealth is no longer so safe outside of Russia — where it has always largely been at the mercy of the Kremlin.”
The declining fortunes of Russia’s elite highlights the squeeze they’ve largely faced from Western nations and their allies.
But the reality is nuanced. Some of the losses are smaller than those suffered this year by tech billionaires including Elon Musk or Mark Zuckerberg.
Russia’s richest person, Vladimir Potanin, the biggest shareholder of mining giant MMC Norilsk Nickel, has expanded his empire in 2022, snapping up Rosbank from Societe Generale.
Over the year, his fortune has barely been dented. He was sanctioned by the US earlier this month, but the Treasury Department didn’t place restrictions on Nornickel, the world’s largest producer of refined nickel and palladium, in an effort to maintain stability in the metals market.
Potanin, worth $US28.5 billion, fared significantly better than Oleg Tinkov, who in April published an expletive-filled post about Russia’s “insane war” on his Instagram page.
Tinkov told The New York Times that after the post he was forced to sell his family’s stake in Tinkoff Bank for just 3 per cent of its real value. The buyer: Potanin’s Interros Capital.
While Tinkov said criticising the war caused him financial harm, it’s unclear sanctions on billionaires are having an impact on Putin more than 10 months after the invasion.
“The war has definitely not weakened the state’s control over the oligarchs,” Semchuk said. “Their influence over Putin continues to be largely overestimated by the West.”
For Abramovich, life now revolves around the Gulf, Turkey, Moscow and Israel, where he holds citizenship. This year, he was reportedly house hunting in Dubai and Turkey, and his superyachts — the Solaris and Eclipse — are parked off the Turkish coast.
While the crackdown from sanctions has chilled their global lifestyles and investment opportunities — Fridman, who was worth about $US14 billion before the war, said this year he essentially had no cash — Russia’s billionaires remain incredibly wealthy.
“Taken as a group, these guys are down,” David Lingelbach, professor of entrepreneurship at the University of Baltimore, said about Russia’s super-rich. “But they’re far from out.”
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
Source: Thanks smh.com