Category: Russia

Former Stada CIS Head of Legal Konstantin Sharlovskiy has joined the Pepeliaev Group as Head of Life Sciences in Moscow.

According to the Pepeliaev Group, Sharlovskiy will advise clients “on different matters connected with the circulation of medicines, medical products, and other types of pharmaceuticals, as well as on other legal matters that are specific to the areas of pharmaceuticals and healthcare.” 

According to the firm, “Sharlovskiy will continue to develop the Life Sciences practice with active support from Pepeliaev Group Partners Ilya Bolotnov and Maria Nikonova, who have many years of experience in providing assistance to clients, including in the areas of pharmaceuticals and healthcare.”

DLA Piper has advised Russian oil and gas company TAIF on the merger of its petrochemical business with Russian petrochemical company Sibur. Herbert Smith Freehills reportedly advised Sibur.

Existing TAIF shareholders will receive a 15% stake in Sibur Holding in exchange for the transfer of a controlling interest in TAIF’s group of petrochemical and energy companies, with the remaining stake in TAIF subsequently available for purchase by Sibur.

According to DLA Piper, the enlarged company will become one of the world’s top five producer of polyolefin and rubber products. According to the firm, “the merger will make the entity’s petrochemical operations more competitive in the global market, improve its resilience to market fluctuations and unlock additional growth potential for Russia’s petrochemical industry through the joint realization of capital intensive projects, boosting chemical non-commodity exports. It will also create new jobs and opportunities for sustainable development and environmental management.”

DLA Piper’s team was led by Moscow-based Corporate Partner Evgeny Glukhov, assisted by Senior Associate Evgenia Kudryashova and Associates Ksenia Mikhaylova and Anna Litovchenko.

Editor’s note: After this article was published, White & Case announced it had advised Sibur. The firm’s team included Moscow-based Partner Nikolay Feoktistov, Local Partners Ekaterina Logvinova and Dmitry Lapshin, Counsels Adam Smith and Pavel Boulatov, and Associates Evgeny Chernyavsky and Tigran Saakyan and Istanbul-based Competition Adviser Sezin Elcin-Cengiz with further White & Case teams in Brussels and Dusseldorf.

DLA Piper has advised Safmar Financial Investments, an investment arm of Russia’s Safmar Group, on the sale of 100% of shares in the Safmar non-state pension fund to Leningradskoe Adagio, an investment company owned by Russia’s Region Group.

The Safmar Group is a large Russian diversified conglomerate. Its structure includes companies in the chemicals, construction, financial services, hospitality, media, mining, oil, real estate and retail sectors.

According to DLA Piper, “the deal is considered to be the largest in Russia’s pension market.” The Safmar non-state pension fund will be renamed and integrated into Region Group’s pension division and will operate under its standards.

DLA Piper’s Moscow-based team was led by Partner Evgeny Glukhov, assisted by Senior Associate Evgenia Kudryashova and Associate Konstantin Savryga.

Dentons has assisted Oleg Boyko, the founder and Chairman of the Board of Directors of Finstar Financial Group, on Finstar’s acquisition of a 99.56% share of St. Petersburg’s SIAB Bank PJSC. 

Dentons describes Finstar Financial Group as “a diversified international investment group founded in 1996 by a group of investors led by Oleg Boyko.” According to the firm, “its assets are valued at approximately USD 2 billion and include investments in the fintech sector, digital services, online lending and retail. Finstar has an investment footprint in more than 30 countries around the world, including the CIS, Europe and Asia.”

According to Dentons, SIAB Bank, which was founded in 1995, “provides the full range of banking services for companies and individuals in St. Petersburg and the Leningrad Region. The bank actively cooperates with the Fund for Assistance in Lending to Small and Medium-Sized Businesses and the Agency for the Support of Small and Medium Enterprises.”

Dentons’ team in Moscow was led by Partner Konstantin Kroll and included Associates Marina Smirnova, Irina Volkova, Boris Belkin, Oksana Kravchenko, and Arina Karsonova.

Dentons has acted as English, Russian and US federal securities law counsel to Domodedovo Airport Group on its Rule 144A/Regulation S issuance of USD 453 million 5.35 percent loan participation notes due 2028; the consent solicitation and tender offer in relation to its loan participation notes maturing in 2021; and the capped tender offer with respect to its loan participation notes maturing in 2023.

DME owns and operates DME Airport, the second largest airport in Russia and Eastern Europe in terms of passenger traffic (in the airport category with annual passenger traffic of over 25 million, according to ACI). It served approximately 28.3 million passengers in 2019 and 16.4 million passengers in 2020. The offering represents DME’s debut Rule 144A / Regulation S issuance, following several series of Regulation S issuances since its debut in 2013. This issuance is DME’s longest by maturity and the largest by size so far.

The liability management element of the transaction, which was financed through the new issuance, resulted in the early repayment of 2021 Notes in full and the partial redemption of 2023 Notes, which together with the new issuance resulted in a significant extension of DME’s debt maturity profile. Alfa-Bank, J.P. Morgan, Raiffeisen Bank International, Renaissance Securities, Societe Generale and Sovcombank acted as joint bookrunners for the new issue. J.P. Morgan, Raiffeisen Bank International and Societe Generale acted as joint solicitation agents and dealer managers for the consent solicitation and tender offer.  

The Dentons team working on the transaction was led by London-based Partner Cameron Half and Moscow-based Partner Tamer Amara, working with London-based Partner David Cohen and Moscow-based Counsel Filipp Petyukov.

Dentons did not reply to our inquiry about counsel for the banks.

Egorov, Puginsky, Afanasiev & Partners is representing a coalition of Avito, IVI, CIAN, Profi.ru, Tutu.ru, Drom.ru, 2GIS, and Zoon in a abuse-of-dominant-position case against Yandex initiated by the Federal Antimonopoly Service of Russia.

According to EPAM, in August 2020, the coalition filed a complaint with the FAS in relation to Yandex’s alleged abuse of its dominant position on the Internet search engine market, referring, the firm reports, “to the fact that the IT giant had been able to create preferential conditions for its services in the Yandex search engine through the use of special interactive blocks, the so-called search engine wizards.”

According to EPAM, “at the end of February, the FAS issued a warning to Yandex, demanding that it eliminate the said violation and provide all market participants with equal opportunities to promote their services in search engine. Yandex failed to comply with this requirement in time, leading to the FAS opening a case against the company for violating antimonopoly legislation on 13 April 2021.”

“This is a precedent-setting case in terms of both its scale and the challenges that need to be addressed,” said EPAM Head of Competition Natalia Korosteleva. “Being able to determine the terms on which to secure a level playing field in the search engines market for own and third party services means laying down the rules of the game for the dominant players in digital markets of the future. This complex task has not yet been addressed by any regulator in the world, yet the FAS has repeatedly driven decisions that are recognized as gold standard by the regulators globally. We are confident that such a decision will be arrived at in this instance also.”

Editor’s Note: After this article was published, EPAM reported that the case was resolved on January 19, 2022. According to the firm, “the Moscow Arbitration Court [approved] the settlement agreement between Yandex, the Federal Antimonopoly Service of Russia, and the claimants in a dispute over unequal conditions promoting Yandex’s own search results, rather than searches provided by third-party services. Yandex unfairly prioritized its own searches through the exclusive use of enriched search capabilities.”

“This dispute could have dragged on for years,” EPAM Partner and Head of Competition Natalia Korosteleva commented. “Instead, we have a decision that signals a clear victory for the principles of competition here and now. We firmly believe that the unique settlement arrived at will serve as an industry standard, and will become best practice globally.” 

“The FAS has shown both an expert approach to analyzing the situation and a strong focus on finding a practical solution to the problem,” according to EPAM Partner Evgeny Bolshakov, “taking into account the needs of the market to ensure competition in the industry in the shortest possible time.” 

EPAM’s team included Korosteleva and Bolshakov, Counsel Anna Arutyunyan, Senior Associates Alexander Kiselev and Igor Gavrilov, Lawyer Oxana Akhmedova, and Junior Associate Anastasia Berbeneva.

On 30 December 2020, sweeping changes to Russian legislation regulating integrated area development (hereinafter referred to as “IAD“) came into force.

 IAD involves the renovation of urban areas that were built up in the Soviet and earlier periods with houses that have no cultural value. These houses are demolished and new buildings are created on the vacated land. IAD is for the development of large areas (sometimes there are many land plots comprising several blocks), so both built-up and vacant land plots may be in an area slated for IAD. However, the mere fact that a land plot is in an area where IAD is planned does not automatically “trigger” the procedure. For this to happen, the local authorities must decide to pursue IAD in the area in question.

The most serious adverse consequence that a land plot owner may face is the land plot being withdrawn for state needs for IAD. The law provides for certain exceptions in which a land plot cannot be withdrawn. Also, the government of the Russian Federation and its constituent entities (regions) can approve a list of real estate that cannot be withdrawn for IAD.

Local urban planning laws specify where IAD may be done. In the Russian Federation, the urban planning zoning regulations include the Rules for Land Use and Development approved by the local government body (hereinafter, the “RLUD“).

Before the December amendments came into force, the law provided that the RLUD had to specify the areas within which IAD was to be implemented on a separate map. In addition, the previous version of the law stated that the local authorities could issue a decision on IAD only if the RLUD specified the area where IAD was permitted.  In other words, when purchasing a built-up or undeveloped land plot an investor could find out in advance that a state authority might decide to pursue IAD in the area.

Now an IAD decision can be made for any area, even if the RLUD doesn’t specify it as an area planned for IAD. In addition, local authorities may decide to do IAD in an area that doesn’t match the boundaries of one indicated as an IAD area in the RLUD.

Thus, we can say that, strictly formally, the new regulation allows local authorities to legally withdraw almost any land plot for state needs even if the RLUD does not place it in an IAD area. Equally, state authorities will be able, at their own discretion, to “remove” any land plot from an IAD even if the RLUD shows it as being within the IAD.

However, it is important to note that the constituent entities of the Russian Federation may decide on their own to retain the previous regulation (that is, to limit the local authorities’ powers over IAD to those areas specified in the RLUD). For example, as of today, the government of Leningrad Region has adopted respective resolution.

The new IAD regulation means that the risk of almost any land plot potentially being assigned for IAD and then being withdrawn for state needs must be considered when acquiring real estate in Russia. Therefore, before deciding to purchase land plots or buildings we highly recommend doing proper due diligence of the land and buildings and protecting the buyer’s interests in the transaction documents. We also recommend making an official request to the authorities in advance to find out whether there are potential plans to include a particular area in the IAD zone. Or, if a decision on the IAD has already been made, the state authorities could be asked to consider excluding the area from the IAD zone. 

By Arina Dovzhenko, Specialist Partner, and Zara Russkikh, Associate, Borenius

Akin Gump has advised Trans-Siberian Gold PLC – the operator of the Asacha gold mine in Kamchatka, Russia – on the process of its GBP 108 million takeover by Horvik Ltd. The buyer was advised by Skadden, Arps, Slate, Meagher & Flom.

Horvik has agreed to buy a 51.2% stake in Trans-Siberian, in two stages, from a group of existing shareholders including private equity firm UFG Asset Management. Horvik has already acquired the first tranche, which represents 24.7% of Trans-Siberian’s shares. The second tranche is conditional on the approval of the Russian Federal Antimonopoly Service and, once received, Horvik will be required to make an offer to the remaining shareholders of Trans-Siberian for their shares on the same terms.

The Akin Gump team was led by Partner Harry Keegan and included Partners Sebastian Rice and Svetlana Volevich, and Associate George O’Malley.

The Skadden team was led by Partners Scott Hopkins and Dmitri Kovalenko and Counsel Adam Howard and included Partner Alex Jupp, Counsel Louise Batty, Associates Craig Kelly, James Michelson, Sergey Chapaev and Jake Foster, and Trainee Kathryn Gamble. On the financing side, the team was led by Partner Clive Wells and included Partner Johannes Kremer, Associates Brendan Macreadie, Alexander Halms, and Ulrike Schuster, and Trainee Cameron Russell.

Egorov Puginsky Afanasiev & Partners has successfully represented Magnit in an antimonopoly case initiated by Chelyabinsk OFAS Russia against Spar and Magnit involving an alleged cartel conspiracy.

The case relates to the increase in the price of buckwheat in Russia. According to EPAM, it resulted from “a large-scale investigation into the buckwheat price increase in March 2020, considered in the context of the regulator’s focus on the pricing of staple food products.”

EPAM reported that Chelyabinsk OFAS dismissed the case on February 8, 2021, after finding “a lack of uniformity and synchronicity in the retail chains’ behavior, as well as the economic impossibility of collusion between Magnit and Spar.”

EPAM/s team consisted of Partner Evgeny Bolshakov, Head of Competition Natalia Korosteleva, and Associates Igor Gavrilov and Oxana Akhmedova.

Egorov, Puginsky, Afanasiev & Partners has persuaded Russia’s antimonopoly agency to approve the partnership between Gett and CityMobil taxi aggregator services.

On March 5, 2021, Russia’s FAS approved the agreement between Gett and Citymobil. Under the terms of the agreement, Citymobil drivers will travel on Gett’s orders in the economy segment, with Gett using a new aggregator model and focusing on the corporate and premium segments.

According to EPAM, “this is the first time such a collaboration has been implemented on the taxi market while maintaining the independence of each of the parties.”

EPAM’s team included the head of the firm’s Competition Law practice, Natalia Korosteleva, and Partner Evgeny Bolshakov, in addition to Senior Lawyer Anna Harutyunyan and Lawyer Oksana Akhmedova.