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This billionaire is very exposed to Ukraine war, and he’s winning

Benjamin Stupples

Torbjorn Tornqvist moved quickly into crisis management mode after Russia annexed Crimea.

The co-founder and chief executive of energy trader Gunvor Group raced to buy out his business partner, Gennady Timchenko, closing the deal just one day before the US sanctioned the Russian billionaire in 2014. To help complete the transaction, Tornqvist, a native of Sweden, had to take out a 10-figure dividend from the privately held firm.

Gunvor chief executive Torbjorn Tornqvist has gotten a boost from the surge in energy prices caused by the Ukraine war. Reuters

Now a surge in energy prices sparked by Vladimir Putin’s invasion of Ukraine is restoring his fortune.

Tornqvist’s net worth has almost doubled since early 2021 to $US3.7 billion ($5.5 billion), returning to levels last seen at the time of the buyout. That’s largely thanks to booming profits at Gunvor, which means “alert in war” in Old Norse, as European nations rush to secure alternatives to Russian fuels.

“The uprooting of normal supply chains following Russia’s invasion of Ukraine and subsequent market upheavals have provided additional support to oil traders like Gunvor,” said Ole Hansen, head of commodity strategy at Saxo Bank in Denmark. “The market remains anything but calm.”

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Major commodity-trading houses banked record profits in 2021 and are on course to do even better this year as sanctions on Russia disrupt supply chains and create arbitrage opportunities. For Tornqvist’s Gunvor, the surge in volatility and Europe’s need for gas has brought windfalls as well as difficulties in the form of huge margin calls when prices fluctuated.

War a boon for energy moguls

Despite a recent easing in commodity prices, this year’s gains have been a boon for moguls in the sector. The fortune of former Glencore CEO Ivan Glasenberg, now at $US7.5 billion, reached a decade high in April, while India’s Gautam Adani, a coal tycoon who expanded into everything from media to green energy, became the second-richest person on Earth last week. By contrast, most of the 500 wealthiest people have lost money this year, hit by rising inflation and falling tech stocks.

Few members of the world’s ultrarich outside Russia and Ukraine have had their fortune as exposed to the conflict between the two nations as Tornqvist.

The 68-year-old billionaire started his career at BP before becoming head of oil trading at Scandinavian Trading. He and Timchenko founded Gunvor in 2000, leveraging Timchenko’s Russian connections and Tornqvist’s trading experience. By the mid-2000s, the firm handled as much as one-third of Russia’s seaborne oil exports, a proportion that later dropped as competitors emerged.

But Timchenko’s focus on Russia became a source of contention, and the two billionaires had been considering a break even before the annexation of Crimea, Timchenko told media in 2014. The event, which led to the tycoon being sanctioned over alleged ties to Putin, only helped accelerate the split.

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The buyout of the Russian tycoon’s 44 per cent holding in Gunvor gave Tornqvist a majority stake valued at around $US3 billion at the time. The company subsequently sold a big chunk of its Russian assets, helping it post record annual profit and handing Tornqvist a dividend of about $US1 billion, which he used to repay part of his debt to Timchenko.

Gunvor, based in Cyprus with major trading operations in Geneva, has repeatedly denied any connections to Russia’s leadership. Now the trader, which said in March it has no material exposure to the country, is increasing its focus on renewable energy. Last year, it set up a new unit – called Nyera, Swedish for “new era” – to invest at least $US500 million in non-hydrocarbon fuels and technology. Tornqvist’s 32-year-old son, Fredrik, an energy transition director at Gunvor, oversees the venture.

Links to Putin

A spokesman for Gunvor, who declined to comment on Tornqvist’s net worth, said the firm will continue to retain the bulk of its profits to invest in its global growth and shift to renewables.

Timchenko, 69, the son of a Soviet military officer, was sanctioned this year by the European Union and UK over his connection to the Russian president, whom he befriended in St Petersburg in the early 1990s.

He returned to Russia in 2014, and his fortune, despite a recent decline due to the war in Ukraine, has boomed over the past decade thanks to his major stake in Novatek, one of Russia’s biggest natural-gas producers. His net worth is valued at $US15 billion, roughly double its total when Tornqvist bought him out of Gunvor.

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A representative for Timchenko, who resigned from Novatek’s board in March and is appealing EU sanctions against him, was not immediately available for comment.

In the immediate aftermath of buying out Timchenko, Tornqvist said ownership in Gunvor was too concentrated. He subsequently cut his stake by transferring shares to employees, who by 2017 held about 40 per cent of the firm’s equity. Since then, Tornqvist’s holding has risen back to 88 per cent as he used dividend proceeds to buy stock from departing staff.

For years, the billionaire has searched for an outside investor to acquire part of the business. In 2019, Gunvor held discussions with Algeria’s state oil and gas producer before the talks ended amid political upheaval in the North African nation. Tornqvist, who is also invested in Swedish soccer club AIK Fotboll and sailing team Artemis, recently said he was still open to offloading part of Gunvor, though he doesn’t plan to give up control.

“I’m not in the market to sell out,” he said at a conference in March.

Bloomberg Wealth

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  • Billionaires
  • Russia-Ukraine war
  • Commodities

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