Some foreign companies trying to exit Russia are facing a big jump in costs as Moscow is demanding bigger discounts on the price tags of assets they want to sell, three people with knowledge of the matter said.
Russia has steadily tightened exit requirements since Western companies started leaving soon after Moscow began what it calls a "special military operation" in Ukraine in February 2022. Executives say navigating the rules is becoming harder.
Foreign companies have already been hit by losses of more than $80 billion from their Russian operations due to writedowns and lost revenue, based on an analysis by Reuters of company filings and statements.
Dutch brewer Heineken said on Friday it had completed its exit from Russia by selling its operations there to Russia's Arnest Group for a symbolic one euro.
Moscow has also gradually imposed additional exit hurdles. The threat of nationalisation also looms, particularly following the July seizure of Danish brewer Carlsberg's and French yoghurt maker Danone's Russian assets.
Companies still in the process of negotiating exits include telecoms group Veon, Nasdaq-listed tech group Yandex and Italian lender Intesa.
Moscow already demands a 50% discount on all foreign deals after consultants selected by the Russian government have valued the business.
Russia also requires a contribution to the Russian budget of at least 10% of the price.
But three people familiar with the exit process for foreign companies said that some deals are facing demands for additional discounts before the government gives a green light.
The sources requested anonymity because the information is confidential.
The Russian finance ministry said it does not force final sales prices to be cut, but it may adjust valuations during the sales process.
"The price may change only in a case when the commission points out the incorrect valuation of a foreign business' market value," it said in a written response to Reuters' questions.
The economy ministry and central bank also appraise businesses and may also make a "correction" to a price, it said.
A government commission that monitors foreign investment has to approve deals involving companies from so-called "unfriendly" countries - those that have imposed sanctions against Russia over its actions in Ukraine. Banks and energy companies also require President Vladimir Putin's personal approval to sell.
A financial market source working with companies seeking to leave Russia said the commission was sending some deals back, saying the valuation should be 20-30% lower.
It is an "unpredictable black box", this person said.
Another person, who works on M&A transactions and with foreign companies, said deals exceeding $100 million were at particular risk of being denied.
This source said the latest change to prices is holding back sales and forcing companies to consider alternatives.
Foreign companies concluded around 200 Russian asset sales between March 2022 and March 2023, the Russian central bank has reported, with about 20% worth more than $100 million.
In its biannual financial stability review, the central bank said foreign companies under pressure to leave Russia were doing so on "unfavourable" terms.
"Last year's exodus of foreigners is continuing, although there are slightly fewer deals," said Suren Gortsunyan, a partner and co-founder of law firm Rybalkin, Gortsunyan, Dyakin and Partners (RGD), which has advised on eight successful deals and plans to file for approvals in another five to six.
"Regulatory constraints that have been building steadily make it harder to exit," Gortsunyan said.
The corporate exodus is a huge windfall for Russian entrepreneurs, as well as Western companies' rivals and former business partners, said Alexey Kupriyanov, director of Aspring Capital, which has advised on dozens of deals, including the expected sale of Veon's Vimpelcom to local management for $2.1 billion.
The Russian finance ministry said the government commission approves about 90% of deals and meets at least twice a week on average to review the latest proposals.
"It can take up to six months for the deal to be prepared by the relevant agency," the ministry said.
Potential red flags would include a potential buyer's lack of experience in the required field, transactions involving intermediary buyers or questions about the valuation of assets, it said.
After the valuation, the finance ministry passes the deal on to the commission, on which representatives of the central bank and several government ministries sit, Nato Tskhakaya, RGD's head of regulatory practice, said.
But the decision is ultimately taken out of sellers' hands. Neither the buyer or the seller is present to hear the commission's deliberations, the finance ministry said.