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Acquiring Borjomi can Create Major Political Problems in Russia for potential Buyers: Berzovsky Factor

Published: August 31, 2012 | 1:55 pm
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Amid worsening economic situation in Western Europe and the US, international investment funds have turned their attention to former Soviet Union (FSU) countries, including Russia, Ukraine, and Georgia.However, investors should be wary of political risks associated with acquiring “post-Soviet” assets as they can affect investors’ status in Russia and even in their home markets, Ruxxindex reports.

IDS Borjomi, the owner of the famous mineral water Borjomi is set for sale for USD 400-500 million, according to Russian business daily Kommersant.

One of the potential buyers told the publication that Salford capital Partners is selling one of the main actives of VDP fund (its actives are run by Salford)- IDS Borjomi Beverages N.V. 100% shares of IDS , 87.34 of which belongs to the fund, is set for sale. The source says that a number of investment funds are interested in this offer: Standard Capital Ashmore, Russia Direct Investment Fund, TPG Capital, Klever Asset Management, AFK system and also a fund close to Alpha Group (name not disclosed).

According to Ruxxindex, renewed interest from investment groups in acquiring Salford Capital Partners, owner of IDS Borjomi, the famous naturally carbonated mineral water brand and number one export from Georgia, is due to the company’s success in Ukraine and other Eastern-European countries except Russia, where Borjomi is banned.

However, acquiring Borjomi can create major political problems in Russia for potential buyers — Salford Capital Partners is owned by Boris A. Berezovsky, exiled businessman and vocal critic of Vladimir Putin’s regime. Berezovsky controlled Borjomi and other post-Soviet assets, such as Aeroflot, AvtoVAZ (maker of Lada passenger cars) and Channel One TV, with his partner, late Badri Patarkatsishvili. Berezovsky was forced out of ownership of his Russia-based assets, but managed to retain control in Salford Capital Partners, incorporated in the U.K. and managed by a US national.

Buying assets from Berezovsky also carries financial and litigation risks, as the Russian government and private investors around the world are after the businessman’s properties. According to a poll of legal experts conducted by RUXX index, there is a real risk that “all deals that involve Mr. Berezovsky’s assets can be challenged.”

International Company IDS Borjomi International – is the largest producer of natural mineral water, a leader in the category of natural bottled water in the CIS and Baltic countries.

IDS Borjomi International has an extensive experience in the production and excretion of the market brands of natural mineral waters. The company offers customers of different ages and income levels the natural, unique, high quality, pure mineral water and soft drinks, giving health and wellbeing every day.

IDS Borjomi International – is an international company, which has offices in five countries and exports its products to 30 countries. Today, the company combines Georgian IDS Borjomi Georgia, Ukrainian IDS Group Ukraine, Russian IDS Borjomi Russia, as well as representative offices: IDS Borjomi Europe (Vilnius, Lithuania) and IDS Borjomi Azerbaijan (Baku, Azerbaijan). The Company owns seven bottling plants in Russia, Ukraine and Georgia. The company employs 3,743 people.

IDS Borjomi International portfolio includes 12 brands. The most famous of them – are “Borjomi”, “Likani”, «Myrgorodska», «Morshynska», «Saint Spring».

IDS Borjomi International is committed to confirm its status in the future as one of the largest and fastest growing companies – producers of mineral water in the CIS and Baltic countries, and the whole of Eurasia as well.



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