Page 16 - bne_Magazine_May_2018_print

16 I Companies & Markets bne May 2018
Russia's AFK Sistema places $1.5bn bid for Indian telecom assets as it resumes investment activity
Vadim Dumes in Paris
Russian private investment conglomerate AFK Siste-
ma put in a $1.5bn bid to acquire the remaining assets of Indian Reliance Communications (RCom), Vedomosti daily said on March 26 citing Indian The Economic Times, as it resumes investing after a corporate war with state owned oil company Rosneft ended.
A separate report showed that Sistema is also planning to acquire 51% in a textile business in the Vologda region, while a sale in the children's goods retailer Detsky Mir
is also on the agenda.
The revival of investment activity from Sistema comes after a damaging legal battle with state oil company Rosneft and its subsidiary Bashneft, that was previously nationalised and re-sold to Rosneft by the state.
In March Sistema paid the last instalment of a RUB100bn ($1.76bn) to Bashneft in an out of court settlement that ended its corporate war with Rosneft.
Now Sistema is eyeing RCom's international and data storage assets for $1.2bn, in addition to $300mn debt by the Indian telecom company to Sistema. Unnamed sources estimated the value of the assets at about $2bn, Vedomosti reported, while noting that Sistema could seek to consoli- date a 100% stake in the company, of which it currently controls 10% through a telecom subsidiary SSTL.
As for domestic Vologda Textile investment, it reiterates Sistema's previously stated interest in light manufactur- ing segments, and in particular the market for uniforms and working gear, now mainly imported from China.
In the meantime the Russian Fund for Direct Investment (RDIF) still sees the possibility for an SPO of Detsky
Mir children’s goods retailer or an anchor investor deal in 2018, the head of the RDIF Kirill Dmitriev told the press as cited by Reuters on March 27.
The first attempt at an SPO of Detsky Mir was sabotaged by a court ruling initiated by Rosneft in December 2017. Sistema controls 52% in the retailer and previously said it will make another attempt to SPO Detsky Mir in March, but this was also called off.
had for auditing the bank’s financial statements.
"That firm failed absolutely to identify the ongoing operation of the huge fraud within the bank over many years which resulted in virtually the entire corporate loan book of the bank being non-performing and without any or any adequate security," Krumphanzl added. "It will now be for the Cyprus court to determine the claims being brought by PrivatBank against PwC in due course."
The stealing of depositors' money by bank owners is a problem that has plagued banking sectors across the Commonwealth of Independent States (CIS), as bne IntelliNews reported in
its long read “Russia’s daylight robbery,” and both Ukraine and Russia have started the laborious job of cleaning up their banking sectors with some success.
PrivatBank has instructed global litigation firm Quinn Emanuel Urquhart & Sullivan (UK) together with Cyprus law firms Antis Triantafyllides & Sons and Chrysses Demetriades & Co. to represent it in these proceedings against PwC.
Currently, the Ukrainian operation of PwC is challenging the NBU's decision to withdraw the bank auditing rights of the company in a Kyiv court after the international firm failed to identify alleged improprieties that led to a multi-billion capital shortfall at Privatbank.
The NBU has removed PwC’s local unit from the register
of accounting firms authorised to audit banks because of the operation's "verification of misrepresented financial information in the financial statements of [PrivatBank]". While banks lending to the companies connected to their owners’ industrial groups is normal in Eastern Europe, PrivatBank’s loan book was clearly an egregious abuse and little more than a scam to steal the bank’s deposits, as bne IntelliNews reported in an award-winning cover story “Privat Investigations” in November 2016 that caused a scandal in Ukraine and lead to the nationalisation of the bank a few weeks later.
Meanwhile, US-headquartered forensic firm Kroll has revealed the non-conformity of an audit report of the Ukrainian operations of PwC with the real financial situation at PrivatBank, according to the NBU's statement published
in January.
"The secret structure [in PrivatBank] carried out numerous operations of bank fraud and fabrication of reports by former management and directors of the bank under the leadership of former shareholders and in favour of former shareholders and a group of affiliated persons," the regulator's statement reads.
At the same time, according to Kroll, PwC's conclusions on PrivatBank's financial statements during 2007-2014 contained positive conclusions, and in 2015, the auditor provided a conditional-positive conclusion.
www.bne.eu