Risks of buying and selling foreign assets

For a foreign seller of a leasing company, the risks are associated primarily with possible changes in regulation in the Russian Federation. So, in December 2022, an additional tax to the budget and an agreed KPI for the acquired company appeared. This not only complicated the approval process, but also reduced the price of assets, explains Evgeny Penkin, director of Salyut Advisory. In addition, there is always a risk that the agreed buyer will be included in the sanctions lists during negotiations or immediately after the signing of documents, but before payment, Mr. Penkin notes. Buyers also bear the risk, he adds: “In such transactions, there are limited representations and warranties on the part of the seller. Accordingly, any risks associated with the business, the tax policy of the previous owner, become the risks of the buyer.

Financial risks at the same time look less threatening. “All such transactions take place with the permission of the Central Bank or the government of the Russian Federation. And this permission implies consent both to the transaction itself and to sending money to the counterparty, ”the expert notes. On the territory of unfriendly states there are restrictions on the movement of money of Russian origin. But the European sanctions directive contains a clause that the restrictions do not apply to Russian subsidiaries of European companies. “Accordingly, the Russian leasing subsidiary, after the approval of the transaction by the Russian government, receives funds from the transaction from another Russian legal entity. The funds then go to the parent company. In this case, funds do not fall under any restrictions,” explains Anton Krivozubov, head of Baltic Bridge AB.

Polina Trifonova