Pamplona Capital to liquidate funds tied to LetterOne

Pamplona Capital Management said it will liquidate every fund with ties to LetterOne Holdings, the investment firm whose co-founders include sanctioned Russian billionaires Mikhail Fridman and Petr Aven.

London-based Pamplona's board approved the "wind-down" of three funds on March 14, the firm said Thursday in a statement, calling the process "irrevocable."

Pamplona's biggest investor has been Luxembourg-based LetterOne, which has almost $3 billion in the private equity firm.

"We had no communication about this decision. It is deeply surprising given LetterOne is not sanctioned, as confirmed by regulators in Luxembourg and the U.K.," LetterOne said in an emailed statement. "It is not clear how Pamplona intends to implement this decision."

The move is the latest twist in a yearslong relationship between the two firms. Pamplona channeled LetterOne's money across a swath of industries, investing in businesses from a frozen meals company to a clinical research firm and a technology parts supplier.

Pamplona is now having to reckon with the costs of being so intertwined with Russian money, which has been the focus of recent sanctions following President Vladimir Putin's invasion of Ukraine.

It's unclear how LetterOne and Pamplona will disentangle, and it may not be easy for the U.K. firm to sell assets that are in any way linked with sanctioned individuals.

"The wind-down can be effected by different mechanisms, including the sale of LP interests to third parties (a secondary sale), as well as through the sale of direct investments," Pamplona said in the statement, which didn't address whether LetterOne has to approve the plan.

Pamplona has raised $11 billion for five private equity funds since its 2005 inception. It said as recently as last year that it caters to "a variety of clients including public pension funds, international wealth managers, multinational corporations, family offices, and funds of hedge funds."

"We will now assess options in a calm and pragmatic way," LetterOne said in its statement. "Our commitment remains to protect the jobs our investments support with integrity and transparency. We hope Pamplona will support these principles."