Bearings rolled out between countries

The largest Russian bearing manufacturer EPK has changed its owner. Alexander Moskalenko, who previously owned the asset, sold it to the ZPIF Industrial Innovation Fund. The perimeter of the transaction included the key Russian assets of EPK, the seller retained the plant in Kazakhstan’s Stepnogorsk and a stake in EPK-Brenko, which produces cassette bearings. According to lawyers, closed-end investment funds are a format for organizing ownership, “well protecting information about the ultimate beneficiaries.”

JSC EPK, the largest manufacturer of bearings in Russia, became the property of ZPIF Industrial Innovation Fund. “Combined closed-end investment fund of industrial innovations” is listed in the register of the Central Bank of the Russian Federation. It was registered on November 28, 2022, the formation was completed on December 26.

The former owner of EPK Alexander Moskalenko confirmed to Kommersant that he had sold 100% of the company’s shares, retaining the Kazakhstani asset that was not included in the deal – the Stepnogorsk Bearing Plant – and a stake in EPK-Brenko (formerly a joint venture with the American Amsted Rail, engaged in the production of cassette bearings, a year ago, the American company announced its withdrawal from the joint venture; see Kommersant dated March 31, 2022). According to Mr. Moskalenko, “portfolio investors” became the buyers of the asset.

EPK Kommersant JSC clarified that ZPIF “invests in corporate securities of legal entities, including those related to innovative sectors of the economy.” “Interest in bearings is due to innovative developments in this sector of mechanical engineering,” the company explained. They added that “the EPK production group, under the leadership of the fund’s management company, will continue to implement the previously chosen business development strategy and will continue to adhere to the strategy of investing in the modernization of production and the creation of innovative products.”

The amount of the deal was not disclosed. The YPC only noted that the purchase was made “at the expense of private investors, the fund’s shareholders”. “Asset valuation was based on market methods, taking into account industry specifics,” the company said. Mr. Moskalenko confirmed that “the asset was valued according to the market” and the amount of the transaction “arranged” him.

According to Forward Legal lawyer Oles Gruzdev, any mutual fund has the following structure: the fund itself is a property complex, which, as a rule, includes real estate and (or) securities; management company – it manages the property of the fund and acts as its nominal owner; and shareholders are owners of shares, their status is close to that of shareholders – they receive property benefits depending on the value of the fund’s property.

“Regardless of the type of mutual fund and the composition of the fund itself, it is not published anywhere who exactly owns the share and, accordingly, the fund’s property complex,” the lawyer explains. “For all third parties, the management company has all the necessary property rights.” Due to the fact that the figure of the shareholder is hidden from the public, but by law he is recognized as the beneficial owner of the fund’s property, Mr. Gruzdev specified, in Russia mutual funds “can be used to hide the figure of the ultimate beneficiary of investments.”

Natalya Skorlygina