Some foreign companies trying to leave Russia are facing increased costs as Moscow demands larger discounts on the assets they want to sell, according to three sources familiar with the matter. Russia has been tightening exit requirements since Western companies began leaving after Moscow’s military operation in Ukraine. These new demands are making it more difficult for companies to navigate the rules. Foreign companies have already suffered losses of over $80 billion from their Russian operations due to writedowns and lost revenue. Dutch brewer Heineken recently completed its exit from Russia by selling its operations for one euro. Moscow has also imposed additional exit hurdles, and the threat of nationalization looms. Companies still negotiating exits include Veon, Yandex, and Intesa. Moscow already requires a 50% discount on all foreign deals and a 10% tax contribution to the Russian budget. However, some deals are now facing demands for additional discounts before receiving government approval. The Russian finance ministry denies forcing final sales prices to be cut but acknowledges that valuations may be adjusted during the sales process. A government commission must approve deals involving companies from “unfriendly” countries, and President Putin’s personal approval is required for banks and energy companies. The commission has been sending some deals back, requesting valuations 20-30% lower. Deals exceeding $100 million are particularly at risk of being denied, which is holding back sales and forcing companies to consider alternatives. The central bank reports that foreign companies under pressure to leave Russia are doing so on unfavorable terms. Regulatory constraints are making it increasingly difficult to exit the country. The corporate exodus is benefiting Russian entrepreneurs and Western rivals and former business partners. The Russian finance ministry says the government commission approves about 90% of deals and meets regularly to review proposals. Potential red flags include buyers lacking experience, intermediary buyers, and questions about asset valuation. The decision ultimately lies with the commission, and neither the buyer nor the seller is present during deliberations.
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