(Bloomberg) -- Despite its location in one of the most exclusive parts of London, a white mansion on Belgrave Square has proven a tough sell.
That’s thanks to its owner: a Russian banker whose assets have been frozen by the Kremlin since 2019.
Would-be buyers have stayed away, in part because they’re wary about dealing with a seller under a freezing order even though a UK court has granted permission to the owner to sell. One exception, according to people familiar with the matter, is North Wind Capital, a little-known two-year-old company that helped set up financing for a prospective buyer.
The London-based firm is carving out a niche in providing and arranging financing for the kinds of deals that traditional lenders tend to avoid. It has received backing from a trust belonging to the family of Boris Mints, another Russian financier living in exile in the west, the people said, asking not to be identified discussing such arrangements because they aren't public.
It does so in a roundabout manner: sometimes offering bonds backed by elite UK properties that are listed on the Vienna stock exchange. In one case, the firm purchased a property through the issuance of profit-participation notes, effectively giving the holders an ownership stake in the property.
Through a special purpose vehicle set up outside the UK, these investments are then parceled up and can be sold to buyers looking to gain exposure to high-end London real estate.
North Wind does not appear to be breaking any rules, said Nicholas Ryder, a professor at Cardiff University’s School of Law and Politics, but the ability to legitimately disguise an investor’s identity “could be regarded as a potential loophole” that enables “those who have been prevented from using the financial system to gain access.”
Following the invasion of Ukraine, the UK introduced new rules to increase transparency around property ownership. At the same time, the proliferation of sanctions affected many super-wealthy Russians with assets in London. Several years on, the country’s prime postcodes remain flush with money of unknown origin, much of which is obscured though complicated deals.
North Wind acts as the middleman between investors and sellers, offering opportunities to lend against — or even own — hard-to-finance assets, the people said. This strategy opens the door to London’s premium properties, and allows participants to make smaller investments — instead of buying one coveted mansion, for instance, a buyer can acquire parts of one through linked bond notes.
It’s a convoluted way of doing business, but it gives investors access to funding deals and has helped North Wind secure financing for complex projects.
At the same time, it has given some potential investors pause — and created headaches for members of North Wind’s sales team.
At least three mainstream investors, some of whom manage pension fund capital and all of whom asked not to be identified describing investment discussions that aren't public, said they declined to participate in North Wind’s strategy due to concerns about the complicated nature of its transactions.
North Wind, which is owned and run by former Deutsche Bank director Ben Williams, describes itself on its website as a multifamily office that advises retained clients with more than $1 billion in investable assets.
“In every transaction,” Williams wrote in response to questions about North Wind, “there is at least one regulated institution which has participated and neither they, nor their respective legal counsel, has ever raised any issue, and many have chosen to continue to make repeat investments alongside NWC.”
Mints had been a major shareholder in the Russian Bank Otkritie, which was bailed out by the state in 2017. Representatives of that institution and National Bank Trust PJSC, also owned by the state, allege that Mints defrauded lenders before leaving the country. Mints has denied the charges in the past and claimed that the charges are politically motivated.
Mints has tried to block the Russian banks from pursuing an $850 million lawsuit against him; England’s highest court will hear Mints’ appeal later this year.
The people familiar with North Wind also say that Mints’s son, Dmitry, is an employee at the firm and is responsible for bringing in investors. That roster already includes high-net worth individuals and family offices based in Israel and Ukraine, as well as expatriate Russians, according to people familiar with the firm’s strategy.
It’s not clear how much money North Wind has raised through its bond sales, but it has been involved in at least several transactions. In addition to Belgrave Square, the group purchased 41 Upper Grosvenor Street in London’s Mayfair neighborhood from Timur Kulibayev, the Kazakh billionaire owner of Halyk Bank, the country’s largest lender. The purchase was funded with the issuance of profit participation notes, according to public property records and people familiar with the matter. A spokesperson for Kulibayev declined to comment.
North Wind has worked with other firms that have ties to the Mints family. That includes Conquer Dawn, an investment firm run by executives associated with Mints, which had a deal to purchase two hotels funded by clients of North Wind, according to a press release.
“Conquer Dawn is controlled by its directors and shareholders and neither the company nor its shareholders have any ongoing contractual relationships with the Mints family or any entities in which the Mints family are a shareholder,” a director of the firm wrote in an email. He added that the company is “fully compliant” with all ‘know your customer’ and anti-money laundering requirements.
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