What is happening with Abramovich’s frozen cash?

One scoop to start: ADQ, the investment fund chaired by Abu Dhabi’s powerful national security adviser, held detailed talks about a takeover of US advisory and asset management firm Lazard earlier this year, people with direct knowledge of the matter said.

In today’s newsletter:

• Chelsea FC’s £2.3bn Ukraine fund delayed

• Pirelli caught in the crossfire as Italy’s government takes on China

• Glazer’s under pressure to pick a buyer for Man U

Abramovich’s effort to help Ukraine is frozen

More than a year since Roman Abramovich sold Chelsea FC, the £2.3bn cash proceeds are still frozen in a bank account because of UK sanctions on the Russian billionaire and wrangling over his pledge to donate the money to victims of the Ukraine war.

For the best part of two decades, Abramovich was the face of Russian investment in the UK. His capital was welcome and he was lauded as the benefactor who turned Chelsea into serial winners, culminating in the football club’s victory in the Club World Cup final on February 12 last year.

Less than two weeks later, Russia invaded Ukraine. Abramovich tried to keep hold of Chelsea by passing ownership to the club’s own charitable foundation. But the plan failed, and Abramovich had to sell.

More than 250 enquiries later, US investors Clearlake Capital and Todd Boehly won the bidding and paid £2.5bn for Chelsea. Although the net proceeds haven’t been confiscated per se, Abramovich can’t lay a finger on them because he remains subject to UK government sanctions.

Abramovich had earmarked the cash for “all victims of the war in Ukraine”, and a series of international experts, including former Unicef UK chief Mike Penrose and Norwegian humanitarian Jan Egeland, are leading on the creation of a foundation to spearhead the humanitarian effort.

So why isn’t the charity up and running?

The trouble is there’s a deadlock over exactly how the cash can be used. The UK government wants the £2.3bn to be put to use within Ukraine’s borders. Penrose says that’s suboptimal because the foundation needs flexibility to help Ukrainian citizens who become refugees, or to support countries hurt by grain shortages as a result of the war.

The money can’t shift from the frozen bank account to the charity until the UK hands out a special licence. Abramovich, too, is required to sign off.

As the UK balances the need to get the funds to war-stricken Ukraine with the risk of being seen to accommodate the wishes of an oligarch, the humanitarian crisis means this is a deadlock that is in urgent need of a solution. 

Rome challenges China’s grip of Pirelli

In France, yoghurt and bottled water have been deemed strategic assets. In Italy, the home of motor racing giant Ferrari, a tyre manufacturer’s relationship with China is attracting government scrutiny.

On Friday, the office of Italy’s prime minister Giorgia Meloni said it will restrict Beijing chemicals giant Sinochem’s shareholder powers relating to its 37 per cent stake in tyremaker Pirelli, citing national security risks.

The move has received a lukewarm response from investors. Pirelli shares remained flat Monday, their first trading day after the decision was published.

The government intervention has prompted some analysts to predict China will retaliate, potentially damaging Pirelli’s business in a country which accounts for 15 per cent to 20 per cent of its total sales.

“Near term, pressure on the shares should go down a bit as Italy did not officially ask Chinese to sell down their stake even though governance uncertainties remain (too) high,” said Oddo Bhf analysts in a note.

The decision concentrates power in the hands of Marco Tronchetti Provera, who has run the company since 1992. His private investment vehicle will have the right to appoint the chief executive indefinitely, despite only holding a 14 per cent stake.

An Italian board member vetted by the government will also be appointed to ensure the order is complied with, the government order said. Sinochem will be barred from accessing certain company information.

Sinochem’s reaction to the decision is still unclear. But the saga, which has publicly pitted the Italian tyre tycoon against China’s Communist Party, may define Sino-Italian business relations for years to come.

The decision shows the influence Italy’s government wields over assets deemed of strategic national importance. Under its broad brush powers, Rome deemed Pirelli’s tyre technology, which includes chips that can access users’ personal information and geolocalisation data, to be a strategic asset.

Pirelli was not considered strategically relevant at the time of the Chinese investment in 2015. But fraying relations between China and the West have led to European governments viewing Chinese investment with increasing scepticism.

Getting caught in the geopolitical crossfire is not likely to help Pirelli’s business. Oddo Bhf analysts say this “still looks like a lose-lose situation” as there isn’t an “easy way towards a resolution of the current governance tensions”.

Clock ticks for ManU’s billionaire owners

Manchester United will start its next Premier League campaign against Wolverhampton Wanderers later this summer. But the biggest nail-biter is happening off pitch.

By the end of last week, the club’s stock had gained more than 25 per cent on reports — later denied — that Qatari businessman Sheikh Jassim bin Hamad al-Thani had edged ahead of billionaire UK industrialist Sir Jim Ratcliffe to buy the club.

All eyes are now on Manchester’s owners, the billionaire Glazer family, to finally make a call.

And while they’re typically ones to shy away from the press, the dragged-out process has fuelled speculation that the six siblings could be divided in their stance, the FT’s Samuel Agini reports.

“There is clearly not cohesion in the Glazer camp,” on whether to pursue a full sale or find a minority investor, according to someone who has worked with the family for years. “But they don’t tell you what that is, so it is very difficult for anyone to help.”

Another person involved in the process said the siblings are on the same page and willing sellers at the right price, however.

It has been seven months since the family hired the Raine Group to review options for the 145-year-old club, the same merchant bank that brokered the £2.5bn sale of Chelsea FC last year.

But this is a very different process than Chelsea, in which sanctioned Russian oligarch Roman Abramovich was forced to make a gametime decision.

Led by executive co-chairs Joel and Avram, the six Glazer siblings have enjoyed a dual-class share structure following an initial public offering in New York in 2012 that has allowed the family to keep tight control of the club.

The family’s B shares wield 10 times the voting rights of A shares, and they automatically convert into A shares when they are sold, meaning they can sell stock without ever jeopardising their control.

But supporters and suitors are fed up alike. Sheikh Jassim, whose father is one of the richest men in the tiny Gulf state, threatened to walk away earlier this month.

And the Glazer clan hasn’t been on fans’ good sides since backing the European Super League in an ill-fated quest for profits.

“Our silence wrongly created the impression that we don’t care, that we aren’t football fans, that we only care about our commercial interests and money,” Joel Glazer told a fans forum after the ESL collapsed in 2021.

The clock is running out for the family to prove their doubters wrong.

Job moves

• KKR has changed the leadership of its Asia-Pacific private equity team. Gaurav Trehan will become head of private equity for Asia-Pacific and Akshay Tanna has been hired from TPG to head KKR’s India private equity. Ming Lu is moving to executive chair for the region.

• UBS has named former Credit Suisse board member Mirko Bianchi as group treasurer and chair of the asset and liability committee, according to Financial News.

• British American Tobacco has reshuffled its board to create a new chief operating officer role as the group’s new chief shifts strategy. Longtime executive Johan Vandermeulen will assume the new COO role.

• Ian Hogarth, a VC investor and founder of Songkick, is leading a new UK government task force on artificial intelligence.

Smart reads

The Takedown Kyle Roche ran a law firm with a leading reputation in the fast-growing field of cryptocurrency litigation. Then his career imploded after secret recordings of meetings he held were leaked on the internet, the New York Times reports.

Power Player PIF’s golf-obsessed Yasir al-Rumayyan has emerged as an influential figure in Saudi Arabia’s efforts to diversify its economy away from oil and into new sectors such as sports, gaming and electric cars. The FT details how he got there.

Billionaire bonfire Ron Perelman says he never offered to sell paintings he later claimed were damaged in a Hamptons fire. Now his insurers argue that hedge fund tycoon Ken Griffin holds the answers, Bloomberg reports.

News round-up

SVB Financial to sell investment banking unit to management team (FT)

PwC, KPMG drawn deeper into Brazilian retailer’s accounting scandal (FT)

AstraZeneca drafts plan to spin off China business amid tensions (FT)

Airbus strikes record deal to sell 500 planes to India’s IndiGo (FT)

Intel to double its investment in German semiconductor factories (FT)