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The Buzz in Belarus: Interview with Alexander Bondar of SBH Law Offices

The Buzz in Belarus: Interview with Alexander Bondar of SBH Law Offices

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Substantial changes for advocates, the economic impact of sanctions, and Russian banks and investors becoming more active as a result are the three topics at the top of Belarusian lawyers’ agendas, according to SBH Law Offices Partner Alexander Bondar.

“The new regulations on advocacy were the most crucial issue of 2021,” Bondar begins. Advocates are lawyers licensed to represent clients before Belarusian courts. “While previously we worked in advocates’ bureaus, owned by the partners themselves, it’s no longer possible for advocates to join such offices,” he says. “Starting several months ago, all advocates’ bureaus were liquidated and advocates now all work within the state’s territorial Bar associations.” He does note that “several advocate bureaus have received the right to create special associations within the territorial Bar associations. But in any case, all of them are regulated by the state and no longer belong to the partner-advocates themselves.”

Several new sanctions – by the EU, the US, the UK, and Switzerland – were passed, for some of Belarus’ largest state-owned companies, Bondar says. “These sanctions impacted the whole economic sphere. International banks, financial institutions, and companies are avoiding working in Belarus, or with companies in Belarus, even those not on the list.”

“The EBRD, for example, decided it will not work with the state (as of last year),” he notes, adding that “several weeks ago, it announced it will stop the private programs as well.” While it previously invested in state utility programs (for water supply and treatment plants) or the reconstruction of the M10 highway – both stopped, according to the SBH Partner – “the EBRD was also active in providing private loans and investments, to some of the largest privately-owned companies. It executed all projects that were already underway, but it has no further projects in the pipeline.” So, for those large companies – players in the production and delivery business in the country – such loans will no longer happen, he says. 

“That has created a space for a growing number of Russian banks and investors to become more active, which is what we’ve seen in the last two or three months,” Bondar says. He mentions Ozon (the largest IT retailer in the region) becoming more active. “As have Russian banks – while they were also investing before, they are now replacing the loans from international financial institutions.”

And this has led to a booming market for M&A transactions, primarily by Russian companies in the IT and high-tech sectors, according to Bondar. “Mail.ru did a number of deals, while Sberbank subsidiary Sbergames is looking for companies to acquire or invest in. Softline has also started looking at local companies, after completing its London Stock Exchange IPO.”

“Overall, the market feeling is that Russian companies offer better transaction conditions, multiples, and estimations – as they are less worried about the risks,” Bondar says. While the high-tech sector was already booming, with “more than 40 transactions between January and November 2021,” according to him, “due to sanctions and being perceived as a high-risk environment, foreign companies would ask for big discounts relative to valuation for these transactions.” So, in some cases, Bondar says “Russian players, caring less about sanctions, have become the more attractive investors, being able to offer better terms.”

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