2024/9/23 UAE investor buys Raiffeisen bank Belarus subsidiary in significantly discounted acquisition

In signs that more wealth and capital is moving away from Europe to Asia as a result of Western sanctions, Soven 1 Holding Limited, an investor from the UAE, has signed an agreement to purchase the Austrian Raiffeisen Bank International’s 87.74% stake in the Belarus-based subsidiary Priorbank, and its subsidiaries. Raiffeisen’s core business has been built up over decades in developing financial services in the Commonwealth of Independent States (CIS) markets, yet it has been under intense political pressure to pull out of the Russian and other related markets by both the European Union and regulators in the United States, both who have threatened to sanction Raiffeisen if it does not comply.

Due to legal complexities in Russia – exiting Western banks need Kremlin approval, which has not easily been forthcoming – Raiffeisen have still not exited Russia. They will be hoping that the sale of their Belarus subsidiary will alleviate some of the Western political pressures it has been enduring.    

The Belarus transaction is subject to regulatory approvals and with closing expected in Q4 2024.

The UAE’s Soven 1 Holdings has effectively purchased cheap European money, as Raiffeisen are reported to have sold the Belarus entity at a discounted €300m, (US$334 million) being the difference between the purchase price and Priorbank’s real book value. This means that EU businesses are being pressured to exit markets at assets discounts of between 15-20% just to comply with their politicians demands. This haircut will also be felt by Austria’s public investors – Raiffeisen are listed on Austria’s Weiner Bourse. Austrian nationals are now having to take haircuts on what have been profitable businesses because of decisions made by their own politicians. It is Asian investors such as the UAE group who are now buying these discounted opportunities.      

Priorbank has been operating in Belarus since 1989 and is one of the largest Belarusian banks by assets. The move by UAE investors may be a trend for other, Russia-friendly investors to start picking off politically undesirable European-owned assets as sanctions threats now equate to discounted asset values. This illustrates that knock down M&A bargains are available in the Russian and CIS region.

Source: portal "Russia's Pivot To Asia"