Race to offload Russian assets by Western companies intensifies due to the ongoing Ukraine crisis, says GlobalData

Several Western companies are reassessing their investments in Russia due to the ongoing Ukraine crisis. While some companies have decided to respond to the crisis by not pursuing any further investments in Russia, others are trying to divest their Russian assets, found GlobalData, a leading data and analytics company.

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “An analysis of GlobalData’s Financial Deals database reveals that many such corporate exodus plans by American and European companies have been announced since the Russia-Ukraine crisis began.”

The US-based TJX Companies’ announcement to sell its 25% stake in Familia, a Russian apparel retailer, is just one recent example involving an American firm heading for an exit.

Many British firms also announced similar exit plans. Shell announced plans to exit equity partnerships held with Gazprom and similarly, BP announced plans to sell its remaining 19.75% stake in Rosneft while Abrdn is also trying sell its stake in Rosneft.

Examples of such divestiture announcements by other European firms include Norway-based Equinor’s decision that it would stop new investments and start divesting its holdings in Russia; and Norway-based Government Pension Fund Global’s plans to divest assets in Russia.

Bose continues: “Offloading these Russian assets may not be easy and the sellers may need to brace for financial impact as valuation of assets is likely to remain low and finding a potential buyer with desirable valuation is likely to be difficult. With Russia now considering seizing the assets of companies trying to pull out of investments, it may make it even more difficult.

“Nevertheless, in instances where acquisitions/investments were announced but not completed yet, such ongoing negotiations by Western companies to acquire assets in Russia can be easily called off. For instance, Austria-based OMV called off negotiations with Gazprom for a stake in Blocks IV And V in West Siberian Basin.”