Croatian retail giant Fortenova says it is close to ditching Russian owner

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Croatian tycoon Pavao Vujnovac is expected to gain a majority share of the retail giant Fortenova, one of the biggest companies in the Balkans, which has struggled for more than a year to get rid of its large Russian shareholder.

The Fortenova saga has highlighted the difficulty European companies face when they try to part ways with Russian owners following the country’s full-scale invasion of Ukraine and western sanctions.

The group owns the Konzum supermarket and is the country’s biggest private employer with 45,000 staff and annual revenue of more than €5bn. Russia’s state-owned Sberbank held a 42 per cent stake in Fortenova but the heavily sanctioned group said last year it had sold that to Saif Alketbi, an investor from the United Arab Emirates.

However, Alketbi’s purchase, which had the financial backing of Russia’s state-owned Gazprombank and came hours before an EU-mandated deadline, has been disputed both by Fortenova’s management and Croatia’s government. They claim he has ties to a Kremlin-connected businessman, which Alketbi denies.

The stake is held through a vehicle called SBK ART which has been sanctioned by the European Council, which said Sberbank retained “effective control” — a claim the bank denies.

Fortenova on Wednesday said Vujnovac has offered to buy out other shareholders through his company OpenPass — which already owns roughly a third of the retailer — and pay up to €660mn to increase his stake to at least 54 per cent.

Discussions over the complex proposal, which has the approval of Fortenova’s board, did not include SBK ART and its disputed owner Alketbi given the sanctions on the former. Because of those sanctions, money from the deal will be held in an escrow account and released only once they are lifted.

Fortenova chief executive Fabris Peruško told the Financial Times he expects OpenPass would take control of the group within a few months, adding it may eventually own it outright.

“With the war in Ukraine . . . [the] sanctioned Russian shareholding significantly restricted our operations and further development, rendering a long-term and sustainable refinancing practically impossible. This situation is now finally about to change,” he said. “Reaching the agreement with OpenPass, which has agreed to underwrite the entire amount of the transaction if necessary, is a key turning point that opens a new chapter for us.”

OpenPass, Vujnovac, Sberbank and Alketbi did not immediately respond to requests for comment.

However, a spokesperson for Alketbi told the FT earlier this year that he owns the stake in Fortenova and would challenge SBK ART’s sanctions in court.

“Mr Alketbi bought SBK ART and owns it,” they said. “Sberbank is not, repeat not, the owner. This stake is not in Russian hands, nor under Russian control or influence . . . SBK ART was wrongly sanctioned at the initiative of Croatia.”

Alketbi also claimed in a separate statement earlier this year that he had offered to buy the entire company, not just Sberbank’s stake. “I first decided to invest in the company back in October 2022 because I believe in the strength and potential of the Fortenova Group.”

The official EU and Croatian view that Fortenova still has a Russian owner is problematic for the company, as it creates an obstacle for refinancing which could push the group into its second default in less than a decade.

US-based HPS Investment Partners agreed to underwrite a €1.2bn bond package in September to provide bridge financing as the company attempted to resolve the ownership issue. However, Peruško warned that unless the company reaches a long-term financing deal by the time the bonds mature in November 2024, it could become worthless.