Since Putin invaded Ukraine, Russia has lost 34 of its 117 billionaires.
According to the Forbes 2022 World’s Billionaire List, Russia has 34 fewer billionaires than it did in 2021, before the invasion began.
With 34 billionaires lost, amounting to more than $263BN, Russian Billionaires have lost an average of 27% of their wealth or the equivalent of $2BN a billionaire. A sum only managed by some 20% of European Family Offices and 24% more in Asia where the majority of Russia is geographically placed.
Forbes also reported that six Russian tycoons saw their wealth decrease by double-digit billion dollar sums led by Alexey Mordashov who lost an unfathomable $15.9BN and Leonid Mikhelson with $10.9BN.
What does this mean for Russia’s economy and particularly, its Family Offices?
Russia’s economy was valued at $1.46TRN in 2020 with a forecast of £2TRN by 2026. Despite being hit with a five-part EU sanction, its economy has remained relatively unscathed but this could be set to change in coming weeks with a proposed ban on all imports of Russian oil by the end of the year.
The sixth sanction could spell disaster for Russia’s economy, heavily dependent on revenues from oil exports which amounted to 45% of Russia’s total income in 2021. If passed, the ban could cause a lot of fiscal damage for Russia and its Family Offices.
It is for this reason alongside many that Russian tycoons are moving their wealth elsewhere.
We have seen a surge in the number of wealthy Russian families establishing a Family Office in the likes of Dubai to manage their wealth and we believe there may be other countries lining up to welcome wealthy Russians, seeking an opportunity in Russia’s downfall.
Russia is an unpredictable market. While its recent economic reforms have made the landscape both opportunistic and rewarding, it can be a challenging climate and so young but established families are opting for an ecosystem with an existing framework of financial and corporate services providers and Dubai seems to be topping the list.
What do you think EU sanctions and the ongoing invasion of Ukraine will mean for Family Offices in Russia?