Sova Capital Limited

Sova Capital Limited (the “Company“), an FCA authorised and regulated wholesale broker headquartered in London, entered administration on 3 March. David Soden, Stephen Browne and Ian Wormleighton of Teneo were appointed Joint Special Administrators of the Company.

The Company employed 72 employees in its London offices and 248 employees at its Moscow branch. It provided a full range of investment brokerage services to institutional and corporate clients. Services included trading and execution in all major asset classes and sectors, as well as global equity and exchange traded finance.

Although it operated across the globe, its primary trading corridor was providing international investors access to the Russian market. As a result, its business has been heavily impacted by the war in Ukraine and the sanctions imposed on Russia and Russian assets.

In normal circumstances, the Company would have been able to accept a substantial equity injection from its ultimate beneficial owner. However, this was not possible given restrictions imposed on Russian nationals by Russian authorities preventing Russian nationals from foreign fund transfers. As a result, the directors concluded that the Company could no longer trade outside of insolvency.

Since their appointment, the Joint Special Administrators have worked to safeguard and commence the return of client assets to clients. An interim distribution of client money entitlements was made on 18 May, with further distributions anticipated in due course.

They have also engaged with the FCA and market infrastructure bodies such as exchanges to ensure that the Company remains compliant with the terms of its authorisation and, if rescued, resume normal trading.

However, given the current estimated deficiency to unsecured creditors of approximately £788 million (and the estimated final dividend rate of 27%, assuming realisations in Russia can be returned to the UK), a rescue of the Company is unlikely and the Joint Special Administrators are now prioritising a sale of the Company’s business and certain assets.

Even if a sale of the Company’s business and assets can be achieved, given the Company’s exposure to Russia and the current sanctions in place, it will likely take several years for the Special Administration to conclude.

Solicitors from Hogan Lovells, Winston & Strawn and Shoosmiths are assisting the Joint Special Administrators.

The Joint Special Administrators’ Progress Report can be found HERE.