Bank of Russia approves deal with Freedom Holding
The Central Bank of Russia has cleared the way for Timur Turlov’s company Freedom Holding to sell its two subsidiaries – Freedom Finance (Cifra Broker) and Freedom Finance Bank (Cifra Bank) – to Maxim Povalishin, former deputy director general and member of the board of directors of Freedom Finance Investment Company. The deal is estimated at $140 million, according to the U.S. Securities and Exchange Commission’s website.
Plans for the future
The deal between Turlov and Povalishin was approved by the regulator on February 10. The two sides plan to close the deal by the end of this month. Freedom Holding announced the arrangement with Povalishin concerning the sale of Cifra Broker and Cifra Bank last autumn. At the time, it was supposed that the Russian businessmen would pay $33 million in cash for assets and pay off obligations for $107 million. Now the deal’s conditions have slightly changed and Povalishin has to pay $49 million in cash.
In November 2022, Freedom Holding acquired 90.43% of JSC Freedom Finance, a Kazakhstani brokerage company, from the company controlled by Povalishin for $89.3 million. As a result, the company is 100% owned by the holding (it already had a 9.57% share before the deal).
Povalishin is expected to pay Freedom Holding with the help of money he got from the holding in November 2022, his own funds and money he is going to get by selling the company’s shares he had received when he was working in the holding.
Once the deal is fully completed, the Russian business of the holding will operate on its own. In October 2022, Freedom Finance changed its name to Cifra. The company is going to obtain new licenses for Freedom Finance Investment Company and Freedom Finance Bank. As Povalishin revealed to Frank Media, he is planning to increase the capital of Cifra Bank and make this company a central pillar of his business. Moreover, Cifra Broker wants to complete the process of acquiring asset management company Vostok-Zapad.
Freedom Holding withdrawal from Russia
In June 2022, Turlov stated that he doubted his American holding would keep its business in Russia because U.S. residents are banned from investing in Russia. It was planned that the Russian division would be renamed and sold to top Russian managers. In July, the company left the Russian market and relocated many of its Russian employees to Kazakhstan.
According to the СЕО of Freedom Holding, the company is going to focus on its business in Kazakhstan. In addition, those technologies and services that proved to be successful will be extended to other markets where Freedom Holding operates.
«Currently, we are waiting for a broker license in the U.K. We hope that our clients will benefit from our business development,» Turlov noted.
Freedom Holding Corp. is an American holding that provides retail financial brokerage, investment consulting, securities trading, investment banking and underwriting services via its subsidiaries. The company is a professional participant of the Kazakhstan Stock Exchange (KASE), Astana International Exchange (AIX), Republican Stock Exchange Toshkent (UZSE) and Ukrainian Exchange (UX). In the second quarter of the fiscal year 2023, Freedom Holding Corp. reported $27.2 million in net profit and $180 million in revenue.