Putin’s best-known billionaire admirer is about to step into the White House and just in case Russia wasn’t being sent enough love, one of China’s best known tycoons just gave the country his own $168 million vote of confidence.
Guo Guangchang’s Fosun International has agreed to purchase the historic Voentorg building just 500 metres from the Kremlin for a price of as much as 10 billion rubles, according to reports in the local Russian press.
The purchase from Russian magnate Dmitry Rybolovlev was confirmed in a press release published by Russia’s Federal Antimonopoly Service late last week. Fosun made the acquisition through Hong Kong registered FPH Europe Holding II Ltd and was joined in the deal by local Russian real estate fund manager Avica, according to the government filing.
Fosun Seeks a Russian Foothold
Shanghai-based Fosun had reportedly been in talks to acquire the circa 1913 Moscow landmark since at least June last year, seeking to raise its public profile in the former socialist republic.
“For Fosun International, this is more of an image-building project,” Stanislav Bibic, a partner at Colliers International told Russia’s Sputnik News at the time. “They want to be able to buy through the Kremlin, to gain access to the real estate market.”
The real estate asset acquisition follows Fosun’s establishment of Fosun Eurasia which the Chinese firm set up as “a key integrated financial platform for Fosun’s investment and asset management advisory businesses in Russia and neighbouring countries” in October 2015. In December, Fosun was said to have entered exclusive talks to buy a large minority stake in Russia’s biggest gold miner, according to a report in Reuters.
Heading into the Market with a Historic Deal
The decision to buy a landmark building in the city centre mirrors Fosun’s approach to the Italian market, where it purchased the historic Palazzo Broggi in central Milan in 2015. That 345 million euro (then $381 million) acquisition of the former home of Italian bank UniCredit also served to raise the profile of the Chinese company as it entered a new market with low name recognition.
In 2015 Fosun also entered the UK market by creating a joint venture with the local investment group Resolution Property. At the time, Fosun explained that move as helping to create a platform for further real estate investments in the United Kingdom.
Fosun’s Russian acquisition comes soon after the company disposed of assets in the US and China.
In mid-December Fosun sold a 50 percent stake in the Bund Finance Centre in Shanghai for RMB 5.33 billion, saying in a filing to the Hong Kong Stock Exchange of the disposal that, “It will increase our liquidity and financial agility.”
That Shanghai deal came less than two weeks after Fosun sold its US insurance subsidiary Ironshore to Liberty Mutual Holding for some $3 billion.