Published by Uma Rajagopal
Posted on November 21, 2024
2 min readLast updated: January 28, 2026
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LONDON (Reuters) -Russian oligarch-backed investment firm LetterOne lost its challenge to the enforced sale of a broadband provider on Wednesday, in the first challenge under Britain’s recent national security law to reach London’s High Court.
LetterOne, whose owners include sanctioned oligarchs Mikhail Fridman and Petr Aven, was made to sell regional provider Upp in December 2022 over fears Upp’s ultimate owners were vulnerable to “leverage by the Russian state”.
The intervention was one of the first under Britain’s National Security and Investment Act, which allows the government to scrutinise and potentially block acquisitions and investments in sensitive sectors.
LetterOne – which owns health food retailer Holland & Barrett and other businesses – challenged its enforced divestment of Upp, which was rejected by Judge Judith Farbey.
The firm said it sold Upp for less than it had invested in the company. Farbey said in her ruling that Upp was sold to Virgin Media O2 in 2023 “for less than the 143.7 million pounds that (LetterOne) had by then invested.
“This is a disappointing decision, given the swift, robust and decisive action LetterOne undertook in the aftermath of Russia’s illegal invasion of Ukraine,” a LetterOne spokesperson said, adding the firm was “considering whether to appeal”.
A spokesperson for Britain’s Cabinet Office said cases under Britain’s National Security and Investment Act are reviewed thoroughly and that “we will continue to apply these rigorous standards in future cases”.
LetterOne had argued its proposals to prevent Upp’s ultimate beneficial owners, including Fridman and Aven, from exerting any improper influence over Upp were wrongly rejected.
The firm’s lawyer, Tom Hickman, said at a hearing in July that British government officials wrongly took into account a potential risk that Britain’s allies might perceive its response as too soft on Russia.
But Farbey said in her ruling that the suggestion that LetterOne’s proposal was rejected “for diplomatic rather than national security reasons” was not correct.
Fridman and Aven stepped down from LetterOne’s board and their shareholdings were frozen indefinitely after they were sanctioned following Russia’s invasion of Ukraine in 2022.
LetterOne said in its annual review for 2023 that the pair “are not involved in any way, directly or indirectly” in the management of LetterOne.
(Reporting by Sam Tobin; Editing by Sachin Ravikumar, Alex Richardson and Jonathan Oatis)
Enforced divestment refers to the legal requirement for a company to sell off certain assets or subsidiaries, often due to regulatory concerns or national security issues.
Corporate governance refers to the systems, principles, and processes by which a company is directed and controlled, focusing on the relationships among stakeholders.
Investment risk is the potential for an investment to lose value or not perform as expected, which can arise from various factors including market volatility and economic changes.
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