A Czech investment firm with significant interests in Russia could end up owning a 5% stake in the company behind the UK’s national lottery, it has emerged.
PPF is poised to acquire shares in Allwyn Entertainment AG via the listing of an investment vehicle in New York in September. Allwyn’s UK subsidiary won the licence to operate the lottery from Camelot this year.
PPF sold its Russian banking assets in May but still has a raft of investments in the country, from insurance to heavy industry and property.
The merger of Allwyn – formerly known as Sazka – with a stock market investment vehicle, the Cohn Robbins special purpose acquisition company, will be voted on by Cohn Robbins shareholders on 7 September.
Gary Cohn, a former chief financial officer of Goldman Sachs and a White House adviser to Donald Trump, would sit on the listed company’s board, the firm said this week.
PPF will end up owning a maximum of 4.99% of the shares in the new company under the $260m “backstop” commitment to support the listing. The float is expected to make Allwyn’s owner, the billionaire Karel Komárek, about $750m.
The Czech tycoon Petr Kellner founded PPF and was the country’s richest man before his death in a helicopter crash during a skiing holiday in Alaska last year.
PPF Real Estate offered leases on commercial properties in Russia last year including the Metropolis office buildings and a joint project to develop South Gate industrial park, both in Moscow. PPF also runs a life insurance business in Russia and holds a near 4% stake in the London-listed miner Polymetal International, worth about £30m.
The deal with PPF is the latest link between Allwyn and Russia. Komárek’s holding company, KKCG Group, runs Moravské Naftové Doly, which has a gas storage joint venture with Russia’s Gazprom in the Czech Republic’s Moravia region. Komárek said in March he was in discussions to remove Gazprom from the venture “without putting ordinary Czech citizens at risk, in the middle of winter”. It is understood these discussions are ongoing.
Liz Truss, the frontrunner in the Conservative party leadership race, has indicated she is likely to intensify the UK’s anti-Russia stance after Moscow’s invasion of Ukraine six months ago.
Allwyn was handed the 10-year licence to run the national lottery in March and will take over the running of it in February 2024. Camelot has appealed against the Gambling Commission’s decision and the first phase of the appeal process will begin this month.
Allwyn, which runs lotteries in Austria, Italy and Greece, posted a 23% increase in sales for the second quarter of 2022, to €902m (£770m).
A spokesperson for Allwyn said: “Allwyn welcomes the scrutiny that goes with being a public company and meets the high standards of governance and regulatory compliance demanded of companies that list on the New York stock exchange. As we have repeatedly said, Allwyn condemns Russia’s brutal invasion of Ukraine in the strongest possible terms.
“PPF will have no shareholding in Allwyn Entertainment Ltd, Allwyn’s UK subsidiary that is its proposed licensee to operate the lottery. PPF’s agreement to participate in the potential listing of Allwyn Entertainment AG on the NYSE would give it a shareholding of no more than 4.99% in Allwyn Entertainment AG.
“This strictly passive investment gives PPF no role whatsoever in the governance and management in Allwyn Entertainment AG or any other group company.”
A spokesperson for PPF said: “PPF is in the process of leaving the Russian market, focusing its investments in Europe, as reiterated in June this year. The group has already divested Home Credit and Finance Bank, its largest Russian investment.
“PPF strongly denounces Russia’s unprovoked invasion of Ukraine. There is no link between PPF’s Russian investments and the group’s commitment to the backstop financing tied to the combination of Allwyn Entertainment and Cohn Robbins Holdings Corp.”