Valuing Russian Assets, Part 1
In this episode, Dan Harris, Brattle Principal, and Tania Tholot, Brattle Senior Associate, delve into the complex theme of valuing Russian assets in light of recent geopolitical tumult.
This thought-provoking episode of The Brattle Exchange centers on the economic repercussions resulting from Russia’s invasion of Ukraine and the subsequent sanctions that have fueled disputes and arbitrations involving European investors in Russia. Dan and Tania dissect the nuanced valuation challenges presented by sanctions, counter-sanctions, and the legal barriers in repatriating profits from Russian subsidiaries.
In part one of this analysis, Dan brings to light the staggering $18 billion of profits trapped in Russia in 2022 alone and addresses the implications for investors compelled to sell assets below market value. Tania discusses how the political context incentivized Russian joint-venture partners to not respect minority shareholder rights, imposing additional risk on foreign investors, and the heightened operating risks for foreign investors. Further, they both tackle the thorny issue of country risk and its effect on asset valuation, suggesting alternative methodologies that go beyond conventional sovereign spread approaches.
Stay tuned for part two, where they will explore exchange rate risks and commodity prices in the valuation landscape.
