35-year-old tycoon targets country where he is sanctioned

Timur Turlov was sleeping in a hotel room in Dubai when his wife woke him up to tell him that his home country had invaded Ukraine.

The 35-year-old founder of the American company Freedom Holding Corp. had come to the Gulf to discuss how to develop business with the heads of its regional offices, including those in Russia and Ukraine. The February 24 attack changed all that.

Instead, his team had to find a way to evacuate staff from Freedom’s Ukrainian office and get rid of the Russian business that generated about a quarter of the company’s revenue, which reached more than 350 million in the fiscal year to March 2021.

“It was not clear where the problems could come from: what decision could lead to irrevocable consequences,” Turlov said in a recent interview from his office overlooking a ski jumping complex in Almaty, Kazakhstan’s largest city. . would have been particularly negative, he added.

Freedom, a Nasdaq-listed brokerage firm based in Almaty, has already come under scrutiny over auditing practices and an unusual tie to a hedge fund that gave it access to some of the initial public offerings. hottest American brands, including AirBnb Inc. and Bumble. Inc. This brought his popularity home, and his shares have soared nearly 900% over the past five years.

The war in Ukraine prompted Turlov to reshape the company. In the months following the Russian invasion, he sold the Russian unit and renounced his Russian citizenship. Now he plans to open a bank in war-torn Ukraine, renewing a previous failed attempt and adding to the brokerage his company already has there.

This is bound to prove difficult given that the nation has sanctioned him and his local Freedom branch for his ties to Russia. Ukraine’s central bank is willing to do business with foreigners, but only with those with “impeccable” reputations – not sanctioned entities, its press office said in a text message.

Turlov said Freedom had submitted the necessary documents to be removed from the sanctions list. He believes he and his company were added by mistake as he obtained his Kazakh nationality before that happened, and he is confident they will soon be removed. Neither he nor Freedom is sanctioned in the United States, United Kingdom or European Union.

Turlov controls nearly three-quarters of Freedom and has a net worth of around $2.5 billion, according to the Bloomberg Billionaires Index. While that figure is down from $3 billion at his peak, he has fared much better than many other tycoons whose fortunes have sunk this year amid rising interest rates and rising interest rates. weakening economy.

His rise began in 2013, when he bought a small investment firm in Almaty and incorporated it into Freedom Finance IC, the Russian brokerage firm he founded at the height of the 2008 financial crisis. He moved to Kazakhstan in 2011 and four years later acquired BMB Munai Inc., a local US-listed oil and gas company, giving him access to the world’s largest stock market without having to go through the tedious IPO process. He renamed it Freedom Holding Corp. and made him take over his brokerage assets in Kazakhstan and Russia.

To get top US quotes, Freedom works with a hedge fund affiliate that buys the shares and passes them on. Clients get bigger allocations the more Freedom stock they buy. During Covid, those stuck at home increasingly turned to commerce, boosting Freedom’s growth.

In January 2021, the company bought New York-based broker Prime Executions Inc., and later that year made an offer for Wall Street boutique MKM Partners to expand further into the United States. But the war in Ukraine brutally put an end to these ambitions. The deal with MKM never happened, with both sides ending the pact in April.

Separately, three Freedom auditors were fined by US officials for failing to include certain disclosures regarding a Belize subsidiary and other violations. Freedom said it resolved a significant portion of these issues in the 2021 and 2022 financial results.

The company has since agreed to sell its Russian subsidiary to board member Maxim Povalishin for $33 million. The transaction, which would give him control of 43 offices and more than 1,700 employees in the country, is subject to the approval of Russia’s central bank.

Turlov is focused on expanding elsewhere. In addition to the Ukrainian plan, he wants to buy a bank in the EU and expand into Kazakhstan, where Freedom’s local unit has captured the biggest market share in state-subsidized mortgages thanks to a rating system. which offers customers online mortgages in less than 48 hours. hours, according to S&P Global Ratings. In June, he launched an online car loan program.

While Freedom’s rapid growth is likely to test its underwriting processes, “they’re fast, they’re digital, and something could work for them,” S&P analyst Roman Rybalkin said in an interview this month. , following a June note.

Meanwhile, Turlov’s firm is taking advantage of the withdrawal of Russian firms from the region.

“Our commercial position in Kazakhstan has improved considerably, as we have lost almost all of our Russian competitors,” he said. “The drastic policy tightening of Western financial firms has also caused them to stop serving customers in the region.”

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)