Russian retailer Magnit announced on Friday the successful completion of a buyback valued at approximately $736 million, providing an exit opportunity for Western investors whose assets had been locked in Russia due to geopolitical tensions.
In September, Magnit initiated the buyback, repurchasing outstanding shares worth around 48.5 billion roubles ($540.6 million).
Additionally, they held a tender offer for 7,899,569 shares, equivalent to roughly 7.8% of the total issued shares, allowing more investors to divest their Russian assets.
This initiative marked the first chance for non-resident shareholders of a Russian public company to liquidate their holdings with settlements in different currencies since Western sanctions were imposed in response to Moscow’s invasion of Ukraine, causing limitations on the flow of capital.
Magnit reported that more than 300 investors from 25 different countries participated in these transactions, ranging from long-term active management funds, passive index funds/ETFs, hedge funds, pension and sovereign wealth funds, to family offices and individual investors.
Following these transactions, Magnit’s wholly-owned subsidiary, Magnit Alyans, now holds a 29.7% stake in the company.
The total payment made by Magnit Alyans for the shares amounted to approximately 66 billion roubles ($735.6 million), as per Reuters calculations.
Notably, Magnit, Russia’s second-largest retailer with a vast network of over 28,000 food and home goods stores across Russia and Uzbekistan, acquired all the shares at a price of 2,215 roubles per share.
This price represented a discount compared to Magnit’s Moscow-listed shares (MGNT.MM), which were trading at approximately 6,260 roubles per share on the same day.
It’s worth noting that the Kremlin has been advocating for a minimum discount of 50% on asset sales involving foreign investors, a policy aimed at safeguarding Russia’s strategic interests.
Overall, Magnit’s buyback initiative not only provided an exit strategy for foreign shareholders but also showcased the company’s commitment to navigating complex geopolitical challenges while actively managing its ownership structure.