The departure of Western firms from Russia has created a new cadre of Russian business elite, as previously little-known figures snap up lucrative assets at cut price assets. The Bell investigated the case of one such figure, Armen Sarkisyan, who has bought a string of Western companies over the last two years, with support from figures inside government.
- Armen Sarkisyan is known as Russia’s “lottery king” due to his ownership of the state lottery operator. But despite having a role that could be high-profile, the mogul has an extremely low public presence. He has never given an interview or statement to the media and there are hardly any official photos of him. Before getting involved with Russia’s gambling industry he worked for Vneshprombank in the 2000s, a scandal-ridden lender that collapsed in 2016 and whose owners were charged with massive fraud for what prosecutors say was essentially the theft of customer assets.
- Sarkisyan has family connections to the bank’s owners, and, perhaps more influentially, is the son-in-law of a former Moscow deputy mayor, Iosif Ordzhonikidze, a powerful official who oversaw the fledgling gambling industry, which had deep roots to the Russian mafia, in the capital during the 1990s.
- Those connections helped Sarkisyan get his start and gave him a network he could call on when the unprecedented fire-sale of Western companies began.
- Since February 2022, Sarkisyan’s S8 capital group has moved to buy-up a host of mid-tier Western assets at discount prices. His purchases of American lift maker Otis and Finland’s Kone have made him a major player in the Russian elevator industry, and he has also become the second largest tyre manufacturer in the country after buying the Russian assets of Continental and Bridgestone, which both left the market. All the deals were struck at discount prices and funded by loans taken out at state banks.
- Alongside Sarkisyan’s historic connections to influential figures in Moscow, he also appears to have the backing of real estate financier Dom.RF’s head Vitaly Mutko, Russia’s former sports minister and deputy prime minister. Sources told the Bell that Sarkisyan and Mutko have struck a plan to gain control of three-quarters of the Russian elevator market, with Mutko planning a multi-billion rouble investment program to modernize Russia’s lifts and install domestic-made infrastructure across Dom.RF projects.
- Sarkisyan’s jump into the tyre market also aligns with the moves of another of his long-standing connections, car dealership owner Alexander Varshavsky, who has bought the Russian assets of Volkswagen and Hyundai, in a move that could make him Russia’s second-largest auto maker, if he can restart production.
Why the world should care
The rise of Sarkisyan, with backing from well-placed sources inside government and industry, shows how the exodus of Western companies is creating a new cadre of business elite inside Russia. It is not just oligarchs and Putin’s closest friends who are getting rich off the forced sale of profitable companies at steep discounts.
You can read the full investigation here.