Kwarteng uses new national security law to stop sale of Truphone assets | Economic news
The fire sale of a UK mobile phone technology provider, whose owners include Roman Abramovich, has been halted by the government as part of a national security investigation into the deal.
Sky News has learned that officials from the Department for Business, Energy and Industrial Strategy (BEIS) issued an interim order this week to block the purchase of Truphone’s assets by Hakan Koc, a billionaire German entrepreneur.
The order, issued under the new national security and investment law, means the sale to Mr Koc cannot proceed until a review is completed.
Kwasi Kwarteng, the business secretary, reportedly signed off on the decision.
This weekend, it was unclear on what basis the order was issued, although it was allegedly prompted by the security services.
Truphone is a mobile virtual network operator with operations in nine countries, focusing on international corporate customers such as investment banks.
City sources said Truphone held an embryonic contract to supply remote SIM cards with BT Group, which they said may have raised concerns about the deal.
They added that Mr. Koc had indicated that he and his co-buyer, Pyrros Koussios, were prepared to exclude this contract from their purchase of Truphone’s assets.
The contractors’ deal with Truphone advisers is said to have been made for £1, but it is also understood to include significant deferred consideration based on business performance.
The postponement of the sale of Truphone’s assets comes during a difficult period for the loss-making company.
He is said to be weeks away from running out of money, which could mean his administrators have no choice but to put him into administration if the deal fails.
Over 400 people work for the company in the UK and overseas.
A sales process has already been launched for Truphone in recent months, with Mr. Koc being selected as the preferred bidder on an exclusive basis.
A source said the issuance of the interim order had produced the “perverse” result of Truphone effectively remaining the property of an already sanctioned Russian oligarch for longer.
Mr Abramovich and two Russian business partners are said to have invested more than £300million in Truphone during their tenure as shareholders.
The oligarch has already presided over the biggest sale of a British asset since Vladimir Putin invaded Ukraine, in the form of the £2.5billion sale of Chelsea football club.
Mr. Koc is a German-born businessman who co-founded the used-car platform Auto1.
The one listed in Frankfurt last year, and although its valuation has since been brought into line with that of tech stocks listed around the world, it has crystallized Mr Koc’s status among the super-rich.
The government has come under pressure to demonstrate that the new national security laws are being vigorously enforced, leading Mr Kwarteng’s department to say last month that they were working well – despite concerns raised by a number major law firms in the city.
“The government is focused on growing our economy and leveling every part of the UK, but that will not come at the expense of our national security,” he said.
“This report shows that our new investment selection process is working.
“It’s quick and easy, giving businesses the speed and certainty to do business in a way that protects the security of the UK.”
In total, more than 200 deals were notified to the government in the first three months after the law came into force, with 17 deals called by officials.
On Saturday, Mr Koc declined to comment, while a government spokesman said: “While commercial transactions remain primarily the business of the parties involved, the government regularly monitors acquisitions across the country. economy in the event of national security concerns.
“The Business Secretary has the power under the National Security and Investment Act to intervene in acquisitions if necessary.”
A city insider familiar with the proposed deal with Truphone said the decision to call it, with the potential risk to jobs, raised questions about whether the new law was being properly enforced.
“The government is in danger of throwing the baby out with the bathwater,” the person said.