Firm founded by Russian oligarchs to buy London building for £100mn

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LetterOne, the London firm set up by a group of Russian billionaires who have since been hit by western sanctions, has agreed to buy a Mayfair building for more than £100mn, according to people familiar with the matter.

The company is acquiring 20 Grafton Street, a 17,000 square foot building comprising office and retail space, the people said, in one of the largest deals it has struck since Russia’s full-blown invasion of Ukraine in 2022. 

The property was previously owned by German national Wilhelm von Finck, Land Registry records show. Finck’s family office did not immediately respond to a request for comment.

The acquisition is the latest indication that LetterOne is moving on from a difficult period in which its founders, including Mikhail Fridman and Petr Aven, were hit with sanctions from the UK and EU in the early weeks of the war in Ukraine. 

The sanctions meant the businessmen had to relinquish control of the group they set up to invest their fortunes, and prompted the firm to introduce a new governance structure headed by City grandee Mervyn Davies. 

This week an EU court quashed Fridman and Aven’s inclusion on the bloc’s sanctions list after concluding that not enough evidence had been provided that the businessmen were involved in efforts to undermine Ukraine, although any lifting of the sanctions will require a decision by member states.

The UK has also imposed sanctions on Fridman and Aven, as well as their LetterOne partners German Khan and Alexei Kuzmichev. 

After it was set up by the four oligarchs in 2013, LetterOne quickly made a splash striking large deals to buy companies including UK health food retail chain Holland & Barrett and a large stake in Spanish supermarket business Dia, as well as investing billions of dollars in private equity funds. 

While sanctions levelled against the founders complicated business for LetterOne, the firm itself is not subject to any sanctions, having frozen the stakes owned by the Russian billionaires and separated its management. 

LetterOne is currently chaired by Davies, a former minister in Gordon Brown’s Labour government who earned $40mn in 2022 for his work at the firm. 

Over the past 18 months, the firm has slowly got back to work investing money and is looking to add further properties to its real estate portfolio. It has more than £3bn in readily available funds that could be invested in opportunities as they arise, according to one person close to the group. 

The group has done a number of deals since its founding shareholders were hit by sanctions, including an $11.2bn agreement in December for it and BASF to sell the non-Russian assets of German oil and gas group Wintershall Dea to London-listed Harbour Energy. LetterOne will remain a minority shareholder in the newly combined company.

The firm has also agreed to back a £300mn deal to acquire a majority stake in a large property portfolio being sold by British Airways’ New Airways Pension Scheme, and bought a building in Birmingham for about £46mn

LetterOne declined to comment.