A group of Russian tycoons has seen a significant windfall, in the middle of Russia’s ongoing conflict in Ukraine. Their companies have resumed or increased dividend payouts, resulting in a collective $11 billion in dividends for 2023 and the first quarter of 2024.
What Happened: A dozen business leaders, many of whom have close ties to President Vladimir Putin, have benefited from the recent economic stability in Russia. This stability has allowed their companies to resume or increase dividend payments, as per dividend data compiled by Bloomberg from publicly disclosed sources.
The dividends, totaling over 1 trillion rubles ($11.3 billion), have been distributed despite the ongoing sanctions and the war in Ukraine, now in its third year. The beneficiaries include individuals who have been sanctioned due to their connections to the war.
Notably, Vagit Alekperov, a major shareholder and former president of Lukoil PJSC, a Russian oil company received the highest dividend of approximately 186 billion rubles. Despite being sanctioned by the UK and Australia, Alekperov has so far avoided penalties from the U.S. and the European Union.
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Other beneficiaries include billionaires Alexey Mordashov of Severstal PJSC and Vladimir Lisin of Novolipetsk Steel PJSC, who received 148 billion and 121 billion rubles respectively. Mordashov is under sanctions from the U.S., UK, and EU, while Lisin faces no major restrictions.
The recent economic stability in Russia has allowed companies to resume dividend payments, despite the ongoing war and international sanctions.
The Russian economy has shown resilience, rebounding sharply after a contraction in the year following the war’s onset. This rebound has been supported by significant government spending to expand the defense industry, protect domestic businesses from sanctions, and provide social support for families.
Despite the current economic stability, there are concerns about potential challenges in the second half of 2024 and 2025, which may prompt the government to raise taxes, according to Chris Weafer, CEO of Macro-Advisory Ltd. For business owners, "it is a case of better to take the money out now rather than risk losing it in taxes next year," he said.
Why It Matters: Despite the economic challenges, the Russian stock market has seen significant growth. In May 2024, private investors invested a record 116.3 billion rubles on the Moscow Exchange. Investment in Russian industries also jumped 14.5% year-on-year in the first quarter, reaching a record of almost 6 trillion rubles, according to central bank data.
In March 2022, Tesla Inc. CEO Elon Musk claimed that Putin might be wealthier than him, underscoring the vast fortunes tied to the Russian president and his associates.
Recently, President Joe Biden condemned Russian missile strikes on Ukraine’s largest children’s hospital, calling it a “horrific reminder of Russia’s brutality.” This underscores the ongoing humanitarian crisis and the international community’s response.
Meanwhile, Chinese President Xi Jinping urged global powers to facilitate dialogue between Russia and Ukraine during a meeting with Hungary’s Prime Minister Viktor Orbán.
Additionally, Ukrainian President Volodymyr Zelenskyy has pressed former U.S. President Donald Trump to reveal his plan for a swift end to the war, emphasizing the urgency of resolving the conflict.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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