US private equity giant TPG has been sued by a jailed Russian oligarch in London’s High Court over a claim the firm was involved in a conspiracy to seize or acquire his assets for below-market value.
Ziyavudin Magomedov has brought the nearly $14bn claim against US-listed TPG, according to 31 August court filings, alleging the firm’s involvement in a conspiracy to seize assets from him or to acquire them at less than their market price.
Magomedov, 55, has brought the case against his former joint venture partner amid serving a 19-year prison sentence — which began in December 2022 — following his 2018 arrest in Russia on charges of embezzlement relating to public procurement contracts involving the 2018 football World Cup.
“The conspiracies had and have as their ultimate objective the wresting of assets from Mr Magomedov or obtaining them for less than their fair value, and for the sole benefit of the hostile parties,” the lawsuit alleges.
“We consider these claims, which relate to a legitimate and proper transaction, to be entirely without merit. We intend to defend ourselves vigorously against such allegations,” a TPG spokesperson said.
Magomedov was the co-owner of a port in the city of Novorossiysk on the Black Sea and was also the controlling shareholder in Fesco, the shipping and transport conglomerate whose assets included the port of Vladivostok.
TPG — one of the world’s largest private equity firms with over $139bn in assets under management, having raised $1bn in its January 2022 initial public offering on Nasdaq — invested in Fesco in 2012.
However after Magomedov’s arrest, TPG noted its intention to sell its 17% stake as part of a move to exit Russia, the court filings show.
The lawsuit alleges that TPG was required by contract to first offer its Fesco stake to Magomedov if it wanted to sell.
Instead, in early 2020, TPG began discussions to sell its stake in Fesco to a company controlled by Russian oligarch Mikhail Rabinovich, the lawsuit says.
In July of the same year, TPG’s founding partner David Bonderman sent a message to Magomedov in prison reassuring him that TPG would sell its stake in Fesco to Magomedov, the court filings state.
The message from Bonderman, founding partner and chair of TPG’s board, was “deliberately misleading,” the lawsuit alleges, because TPG had already committed to sell its stake to a company controlled by Rabinovich.
In November 2020, Bonderman sent a second message to Magomedov, who was still in prison. According to court filings, the note said TPG had “‘not colluded with any other buyers or indeed acted to favour any other buyer in any way’”.
The lawsuit claims this note was a “misrepresentation”.
The sale to Rabinovich’s company in November 2020 was the subject of a London Court of International Arbitration decision in 2022 which concluded that TPG’s stake should instead have been sold to Magomedov’s company.
“The transaction was without bias to any party,” the TPG spokesperson said. “The right of first offer was not completed because the monies sent to TPG came from a third party with whom TPG had not had any previous dealings and where TPG could not satisfy its relevant [anti-money laundering] protocols.”
Magomedov’s claim alleges that Rabinovich acquired the stake in Fesco with the ultimate goal of selling it to Russia’s state nuclear energy company Rosatom.
The claim also accuses Russian state pipeline company Transneft of playing a key role in seizing Magomedov’s stake in Novorossiysk Commercial Sea Port.
The lawsuit alleges that Transneft — led by president Nikolay Tokarev — told Magomedov in 2018 that if he agreed to sell his stake in NCSP to a company controlled by Transneft for $750m, Tokarev would intervene with Russian President Vladimir Putin and secure Magomedov’s release from prison.
This was substantially less than the stake was worth, the lawsuit alleges.
The $750m sale price was subsequently confiscated by the Russian courts, therefore Magomedov’s company “received and retained nothing at all in return for its interest,” the claim states.
The court filings claim that Magomedov’s companies were victims of a “corporate raid” and the “coordinated attempt at a hostile takeover by third parties”.
The lawsuit lists a host of defendants alongside TPG including Rabinovich, Rosatom and Transneft.
Rabinovich could not be reached for comment. Rosatom and Transneft were contacted for comment.
Magomedov has appealed against his criminal conviction in Russia.
From Financial News
https://www.penews.com/articles/tpg-sued-by-jailed-russian-oligarch-in-14bn-claim-20230927
