A handful of foreign companies trying to exit Russia are facing a big jump in costs as Moscow demands more significant discounts on the price tags of assets they want to sell, three people with knowledge of the matter said. Russia has steadily tightened exit requirements since Western companies started leaving soon after Moscow began a “special military operation” in Ukraine in February 2022. According to Reuters calculations, companies have already written down their assets in Russia by more than $80 billion. Moscow has also raised the threat of nationalization, including seizing Danish brewer Carlsberg’s and French yogurt maker Danone’s Russian assets in July. A government commission has already seized assets of more than 100 Western companies since the start of this year.
A new stipulation from the government, introduced in late March, required companies to sell their assets to a local buyer before they could move them abroad. Executives say that this requirement, along with a revised 10 percent exit tax on the sales of assets to local buyers, has made it much harder to get out of Russia. The 10 percent tax is especially tricky for American companies, which must seek permission from the Treasury Department to pay it or risk running afoul of sanctions against Russia over the war in Ukraine.
Despite these hurdles, the departure from Russia is continuing. The central bank said that foreign companies have sold nearly 200 Russian assets worth more than $100 million in the past few months. But the pace is slowing, and Moscow’s latest moves have blocked or delayed several deals.
One of the most high-profile cases involved Swiss lender SocGen, which sold its stake in the Russian state-controlled Rosbank to a group of Russian businessmen for a symbolic dollar. Investors praised the deal as a model for other Western companies seeking to escape Russia. But many others are stuck.
A source close to a company in the oil and gas sector says the government commission that oversees foreign investment is sending some deals back to ask for a lower valuation of businesses. The source said the panel is particularly reluctant to approve deals with companies from “unfriendly” countries that impose sanctions on Russia over its actions in Ukraine.
In addition to demanding a discount, the commission requires that all foreign buyers of Russian assets place at least 20% of the purchased businesses on the domestic stock market within a year. And it may require a contribution from them to the budget of up to 10% of the purchase price, the Vedomosti Daily reported.
Some foreign companies seek to get out of Russia by selling their businesses to their Russian management rather than through an external sale. But that can be a very long process, as the commission reviews each deal in detail. A lawyer who advises foreign companies on the sale of their Russian assets says the commission can take up to six months to review a deal.
