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In Yevgeny Prigozhin’s money machine

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World markets are relatively quiet on Monday morning after a weekend of turmoil in Russia. And nothing has been heard from President Vladimir Putin of Russia or his rebellious military mercenary chief, Yevgeny Prigozhin, after Prigozhin’s aborted march on Moscow.

But experts expect the Kremlin to pressure the man who took on the biggest challenge to Putin’s authority in his 23 years in power — and seeks to limit the resources Prigozhin has used to launch a multimillion-dollar multinational corporation. to help fund its operations. .

The incident exposed deep cracks in the Kremlin’s war machine. The instability pushed the ruble down and is expected to agitate commodity markets for months. European natural gas prices rose this morning and Brent oil is rising. (Trading in European equities and US futures was mixed.)

“The risk of further civil unrest in Russia should now be factored into our oil analysis for the second half of the year,” Helima Croft, head of global commodities strategy at RBC Capital Markets, wrote in an investor note this morning. Rising commodity prices could put further pressure on central banks, which are already struggling to contain inflation.

Who is Mr. Prigozhin? Europe and the United States have been trying for years to shut down Prigozhin’s sprawling business. On the FBI’s most wanted list, Mr. Prigozhin rose quickly in Putin’s Russia – from being the president’s caterer of choice to winning major contracts that funded Wagner Group, his private mercenary operation. Founded in 2014, Wagner fights wars and trains militias in politically troubled countries, and it’s Putin’s go-to force when military campaigns go awry, such as in Syria and Ukraine. And Wagner’s internet troll farms goal Western democracies and elections, including the 2016 US presidential campaign.

Wagner is a “brutal” transnational criminal organization, said the Ministry of Finance. Evro Polis, a company affiliated with Prigozhin, which won energy concessions in Syria in exchange for military support. In Sudan and the Central African Republic, Wagner has engaged in mining activities to help fund his operations.

To avoid sanctions and hide his finances, Wagner often demands payment in gold, diamonds and transportation of oil and gas. The Financial Times estimated that between 2018 and 2021, income from Wagner’s holdings of natural resources was approximately $250 million.

Mr. Prigozhin also calls on a worldwide network of corporate lawyers to fend off Western authorities, it said a separate FT report. The Treasury Department has identified business partners helping Wagner fight in Ukraine: two Russian firms – Terra Tech and AO BARL – and China’s Spacety, which provides satellite imagery to the group.

The uprising has weakened Mr. Putin, but what will he do now? Bill Browder, a former investor in Russia who has become one of Putin’s biggest critics, told DealBook that the president would try to assert his authority by any means necessary. “Unless he can show he is so brutal that everyone has to deal with him, this is the beginning of the end. Recovery will require a massive crackdown,” he said.

Alexander Gabuev, director of the Carnegie Russia Eurasia Center, told DealBook that Mr. Putin may be far from done. “This may be another demonstration of dysfunction, but he’s very good at finding a way to adapt and survive. Staying in power is his great talent.”

The Chinese currency hits a seven-month low against the dollar. The renminbi is facing continued pressure of China’s slowing economy, inclusive falling consumer spending. A cheaper renminbi will help Chinese exporters by making their goods cheaper abroad, but domestic businesses are likely to suffer.

Britain intends to tackle the ‘greed’. The country’s finance minister Jeremy Hunt will meet with regulators this week to discuss ways to dissuade companies from raise prices too high. The move signals a change by the government, which has previously been more relaxed about reported extortionate profits as Britain suffers from stubbornly high inflation.

Wall Street continues to swing the axe. Goldman Sachs is in the process of firing 125 directors worldwide JPMorgan Chase is cutting 40 investment banking positions in North America, Bloomberg reports. The moves come as banks try to cut costs amid a protracted slump in dealmaking.

SpaceX is reportedly pursuing a $150 billion valuation. Elon Musk’s rocket company is planning a new round of staff stock sales that would raise its valuation from the $137 billion it raised in January, according to Bloomberg. It comes amid SpaceX’s continued success in launching rockets and expanding its Starlink satellite-based internet service.

As investment in sports teams heats up, a Hollywood motorsport mash-up was announced on Monday: a group including actor Ryan Reynolds is taking a 24 per cent stake in the Renault-owned Alpine Formula 1 team. It’s the latest bet on sports team ownership and the lucrative sponsorship and media rights deals it can generate.

The agreement: RedBird Capital Partners (which has interests in Fenway Sports Group and AC Milan), Otro Capital and Mr. Reynolds’s Maximum Effort Investments are leading a 200 million euro ($218 million) investment in Alpine, with a valuation of $900 million. Participating in the investment are the actors Michael B. Jordan and Rob McElhenney.

It is the first deal for Otro Capital, which sprang from RedBird to invest in sports teams and is led by Alec Scheiner, who previously worked for the NFL’s Dallas Cowboys and then ran operations for the Cleveland Browns. Mr. Scheiner will join Alpine’s board of directors.

It is a bet on continued US interest in Formula 1. The league has exploded in popularity in the United States since its sale to Liberty Media in 2017, largely due to the Netflix series ‘Drive to Survive’, which has taken the sport’s rise and overall fandom to new heights.

Renault hopes to further develop the Alpine brand. The team, which finished fourth in Formula 1 last year, is an important showcase for the French automaker’s prowess as the company aims to make more than half of its sales from electric cars by 2030.

The buyers have had great success capitalizing on sports teams:

  • RedBird bought a 15 percent stake in the Rajasthan Royalsthe Indian Premier League cricket team, in 2021 – and saw the value of his investment rise after the cricket league sold its broadcasting rights for a record price.

  • And Mr Reynolds and Mr McElhenney bought Wrexham AFC, the low-ranking Welsh football club, in 2020 and turned it into a media phenomenon, partly thanks to the hit reality TV series ‘Welcome to Wrexham’.

“They looked at us like, ‘Maybe you can help us in the industries where you’ve had success in the US – ticketing, hospitality, sponsorship, licensing, merchandising, content,'” said Mr. Scheiner to DealBook.

With global dealmaking in a rut, Big Law is increasingly looking to capitalize on Saudi Arabia’s oil-driven investments to boost their fortunes. That now includes large companies like Kirkland & Ellis, which are overweight open shop in the kingdomalongside Latham & Watkins and Greenberg Traurig, reports The Financial Times.

But this could put some companies in an uncomfortable internal conflict:

The invasion of the kingdom by major law firms represents a potential clash between the liberal values ​​espoused by senior officials in the US and elsewhere, and the human rights record in Saudi Arabia, which continues to imprison dissidents and where homosexuality remains a capital crime. …

US law firms have faced increasing political pressure to drop certain clients, with Kirkland & Ellis parting ways last year with two star lawyers representing the National Rifle Association, the gun lobby, following widespread outrage over a school massacre in Texas. Other firms have refused to work for anti-abortion groups or opioid manufacturers, while former US President Donald Trump and his associates have been turned down by numerous elite outfits.

Some top lawyers defended their firms’ increasingly close ties to Saudi Arabia: “We do not independently assess the local customs, religious beliefs and value systems of every jurisdiction and culture we enter,” Richard Rosenbaum, executive chairman of Greenberg Traurig, told the FT. it is not for us to judge that way.”

— Larry Fink, the CEO of BlackRock. Speaking at the Aspen Ideas Festival, Fink, a longtime advocate for incorporating environmental and social considerations into investment decisions, said the generic term for that strategy had become too politicized. (He reiterated that he himself had not abandoned the principles of ESG investing.)

Inflation data, a large meeting of central banks and earnings from large consumer-oriented companies will be in the spotlight. Here’s what you can watch.

Tuesday: The Conference Board releases its latest consumer confidence report. Walgreen Boots Reports Fiscal Third Quarter Results.

Wednesday: The European Central Bank shuts it down annual forum in Sintra, Portugal. Central bank leaders including Jay Powell of the Fed, Christine Lagarde of the ECB and Kazuo Ueda of the Bank of Japan will discuss monetary policy there. The Fed is set to release the results of its annual bank stress tests, the first major report card on lenders since the collapse of Silicon Valley Bank.

Satya Nadella, the CEO of Microsoft, and Bobby Kotick, his counterpart at Activision Blizzard, are expected to testify on the final day of a hearing related to the FTC’s attempt to block their $70 billion deal.

Thursday: Nike and H&M come with quarterly figures.

Friday: Japan and the Eurozone will publish their latest consumer price index reports. The Department of Commerce will also release its latest report on personal consumer spending.

Offers

  • Western banks fear rising tensions between Washington and Beijing could prevent them from working on the project Shanghai IPO of Syngenta, the giant of agricultural chemistry. (FT)

  • IBM agreed Buy app, which makes information technology management software, for $4.6 billion. (IBM)

  • Junk bond sales are up — because issuers offer more protection to potential buyers. (WSJ)

Policy

  • Gerson Lehrman group, which connects clients to a network of industry experts, is reportedly laying off workers in China as Beijing cracks down on Western consultancies operating there. (FT)

  • The centrist political group No Labels is urging Sen. Joe Manchin, a West Virginia Democrat, to run for president on a third-party bid — but won’t say who is funding the effort. (Politics)

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