Roman Abramovich: The ‘billionaire from nowhere’ and his back-channel diplomacy

One thing to start: American football star Tom Brady has joined Consello, the new venture from the disgraced public relations guru Declan Kelly who quit Teneo last year after sexual harassment allegations.

Tom Brady, the National Football League star, is joining Declan Kelly’s new firm Consello as a partner © AP

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Abramovich’s diplomatic voyage

Roman Abramovich’s allies paint him as a philanthropist and football enthusiast who flung himself into attempts to stop Russia’s invasion of Ukraine.

His critics say he’s a cunning businessman who, having made his money from buying oil group Sibneft in an auction (which critics allege was rigged), would do almost anything to preserve his carefully-constructed life in the West and salvage his overseas assets.

The role played by Chelsea Football Club’s owner in Russia-Ukraine peace talks, which Vladimir Putin personally approved, remains unclear, according to a source sympathetic to the Russian billionaire, who spoke to the FT for this deep-dive by DD’s Arash Massoudi and a team of colleagues.

“Could it be a double agenda? Sure, but who else could do that — to help Ukraine and stop Russia?” the person close to him said. “Roman’s the only one who’s trying.”

Orphaned from the age of three, Abramovich found his way into oil trading after the collapse of the Soviet Union and — thanks to a chance encounter in 1994 with the Russian tycoon Boris Berezovsky — was well placed to take advantage of the country’s pawning of its crown jewels.

During that period of turbulence, Abramovich acquired Sibneft with Berezovsky for about $200mn, a fraction of the $13bn for which he would sell it to state-owned Gazprom in 2005, a deal that provides the source of most of Abramovich’s wealth.

Vladimir Putin and Roman Abramovich
Vladimir Putin and Roman Abramovich

“He was a shadowy tycoon from Siberia [ . . .] then all of a sudden he is a legitimate British businessman with a fat cheque underwritten by the Russian government,” said Roman Borisovich, a former Russian banker turned anti-corruption campaigner.

The so-called “Billionaire from Nowhere” played down any suggestion that he was a close confidant of Putin as he snapped up a £200mn portfolio of UK property, various megayachts and the football club that made him a household name in Britain. (Side note: his 15-bedroom mansion in Kensington Palace Gardens was formerly the Soviet embassy.)

A map showing the flight path of Abramovich's personal Boeing 787 from Nice to Moscow on 24 Feb. The map also shows the routes of his personal Gulfstream jet during Feb and March. The flight paths show a difference in routes following the closure of EU airspace to Russian traffic on Feb 27 2022

But as his Londongrad empire came under fire, Abramovich flipped the script that he had written for himself, using his personal relationship with Putin as his trump card and a source of leverage as a peacemaker as he jetted between Moscow, Israel and Turkey and even Kyiv.

“It looks like they have much closer relations than I believed. He was always closer to Putin than me, but I didn’t think he was this close,” said one oligarch who has known both men since the 1990s. “Nobody was aware. Nobody else could play this role.”

As Abramovich shuttles around, so too do some of his yachts. He owns or is linked to five yachts estimated to be worth almost $1bn, including several whose ownership remained secret until the FT first reported about their existence last week.

Solaris, which he reportedly owns, left a Turkish marina on Monday after the FT reported lawyers’ views that the UK-listed operator of the port risked violating sanctions by harbouring the vessel.

Northstar goes south

In November 2020, SoftBank lifted the lid for the first time on SB Northstar, a buccaneering internal hedge fund run by Akshay Naheta, a then 39-year-old ex-Deutsche Bank trader based in Abu Dhabi.

Seventeen months on, the unit has turned out to be an astonishingly fast way of burning through eye-watering sums of cash.

In its short life it has managed to rack up between $6bn and $7bn in losses, much of which comes from the disastrous “Nasdaq whale” trade which SoftBank sources have pinned on Masayoshi Son himself. (Son said in November that he would personally bear a large chunk of Northstar’s losses, though it’s not entirely clear when SoftBank will collect the money.)

Now, it’s game over for Northstar. Naheta left SoftBank last Thursday and almost all of the hedge fund’s positions have been liquidated, DD’s Rob Smith and Arash Massoudi and the FT’s Antoni Slodkowski report.

Akshay Naheta
Akshay Naheta is the architect of some of SoftBank’s most complex and controversial trades © REUTERS

As Naheta departs, it’s worth looking back over some of his most intricate trades.

One was a 2019 deal in which SoftBank Investment Advisers structured a €900mn convertible bond investment in Wirecard, the German group that has since collapsed in a massive fraud. At the same time, SoftBank said it would pursue a “strategic co-operation agreement” with the payments company.

It came immediately after FT reports raised serious doubts about the validity of Wirecard’s accounting, and provided a significant vote of confidence after which shares rallied.

Within hours of the deal closing, SoftBank effectively took its money off the table via a sale of new bonds to a broad group of investors, carried out by Credit Suisse. But it retained exposure to Wirecard’s rising shares — though they ultimately collapsed, wiping out hundreds of millions of dollars of paper profits.

Another of Naheta’s deals was SoftBank’s bet on THG, the Manchester-based purveyor of make-up and protein powder.

Last year SoftBank injected $730mn into London-listed THG as the cornerstone investor in a $1bn capital raise. At the same time it announced it had an option to buy a stake in the company’s third-party ecommerce and logistics unit, Ingenuity, at a dizzying $6bn valuation.

The option arrangement helped hand SoftBank an instant gain on its investment — on a day when THG stock might have fallen, given the equity raise was diluting existing shareholders — though THG’s shares have since plummeted.

SoftBank still holds the position in THG, having shifted it to SoftBank Group. But it’s hard to imagine it using that option, now that THG’s entire market cap has slid to about £1.2bn.

Meanwhile Andreas Hansson, a SoftBank executive and THG board member, is due to leave the Japanese group at the end of April, according to people familiar with the matter.

Musk takes his Twitter habit to the next level

Is Elon Musk setting the stage for a massive leveraged buyout, or just trolling Twitter by investing cash he has kicking around to buy 9.2 per cent of the company?

On Monday morning, Musk, the man behind perhaps the costliest tweet in history, disclosed a $2.9bn passive investment in Twitter. The announcement sent the tech group’s shares soaring 27 per cent and Lex wondering whether he might try to buy the company outright.

Elon Musk
Elon Musk has more than 80mn Twitter followers © AP

Musk, chief executive officer of Tesla and SpaceX, is inserting himself into a company that has long frustrated shareholders and drawn in investment from two of Wall Street’s most influential investors.

Two years ago, activist investment firm Elliott Management and private equity giant Silver Lake invested $1bn in Twitter and took board seats as the struggling social network began planning a succession from co-founder Jack Dorsey.

Elliott’s Jesse Cohn was given a board seat he relinquished a year later, while Silver Lake’s co-chief Egon Durban was named a director, a position he retains.

In November, Dorsey resigned as chief executive and was replaced by Parag Agrawal, its former chief technology officer. Then came a tech sell-off that halved Twitter’s stock from the prior year.

Enter Musk, who in late 2021, sold more than $16bn in Tesla stock, then bottom fished on Twitter.

It’s unclear what comes next. Is he plotting something more ambitious, or just trolling his 80mn followers?

On one hand, Musk attempted to pull off a buyout of Tesla on Twitter, with his infamous “funding secured” tweet in 2018, which came moments after an FT scoop on Saudi Arabia investing in the electric carmaker.

“I’m excited to work with Silver Lake and Goldman Sachs as financial advisers, plus Wachtell, Lipton, Rosen & Katz and Munger, Tolles & Olson as legal advisers, on the proposal to take Tesla private,” he tweeted on the ordeal.

The deal never materialised and the SEC ultimately charged Musk over his tweets which it said contained “a series of false and misleading statements”. The suit was settled with Musk paying millions in fines and agreeing to a monitor of his tweets, but not admitting to violations.

Now Musk carries about a $300bn net worth and basically anything is possible, even a Twitter takeover.

Don’t discount the other characters involved with Twitter. Elliott has organised more than $30bn in buyouts in 2022 alone, while Silver Lake was an architect of Michael Dell’s $67bn takeover of EMC in 2016. Maybe, this time round, Musk actually has funding secured.

Job moves 

  • Sequoia Capital partner Roelof Botha will enter the venture capital firm’s top job as senior steward, replacing Doug Leone, who will remain on as a general partner.

  • Rodolfo Landim, the president of Rio de Janeiro football club Flamengo, has rejected a job as chair of Brazil’s largest company Petrobras that the government nominated him for, saying he wants to concentrate on the sports team.

  • Former Morgan Stanley in-house counsel Stephen Morris has joined law firm Katten as a partner in New York.

  • Latham & Watkins has hired Katherine Rocco as an antitrust partner based in New York, focusing on private equity. She joins from Kirkland & Ellis.

  • Swiss drugmaker Novartis is overhauling its management as part of plans to save $1bn by 2024.

  • Alden Millard has been elected chair of Simpson Thacher & Bartlett’s executive committee.

Smart reads

Take two Standard Life Aberdeen’s former chair Martin Gilbert has plotted an unlikely second act turning a cash shell into what he hopes will become an asset management empire. Critics say the businesses he has assembled are disjointed and subscale, the FT reports.

Back to Earth Spac-peddling celebrities and Wall Street luminaries made rosy promises to starry-eyed investors. Now the blank-cheque boom has turned into a bust, and the SEC is trying to stop rampant abuses, the FT’s Brooke Masters writes.

The schlubby billionaire Sam Bankman-Fried sleeps on a bean bag and says he’ll give away all but 1 per cent of his earnings, or at least $100,000 a year. Still, the FTX crypto exchange founder is now part of the power structure that causes the problems he says he wants to fix, Bloomberg reports.

News round-up

VTB sanctions leave its City landlord out of pocket (FT)

Greensill Capital accused of fraud as battle to recoup losses intensifies (FT)

India’s HDFC Bank plans megamerger with housing finance parent (FT)

Ariel launches bid to elevate minority-owned firms with $1.3bn deal (FT)

Investment firm files Finra arbitration demand against Morgan Stanley (Wall Street Journal)

Polestar to sell 65,000 electric cars to Hertz in $3bn deal (FT)

EY revives the big-budget corporate shindig with Florida theme park trip (FT)

Jamie Dimon warns of ‘volatile markets’ as Fed shifts policy (FT)

US probes Activision Blizzard CEO’s brunch meeting with trader before Microsoft deal (FT)

AMD to buy cloud start-up Pensando for $1.9bn in data centre push (Reuters)

Channel 4 to be sold off by government for up to £1bn (FT)

Tiger Global burnt by spec tech dumpster fire (Alphaville)

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Roman Abramovich: The ‘billionaire from nowhere’ and his back-channel diplomacy Source link Roman Abramovich: The ‘billionaire from nowhere’ and his back-channel diplomacy

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