Gibraltar tests the water with sale of an oligarch's superyacht

·4 min read
Axioma superyacht oligarch - JON NAZCA/REUTERS
Axioma superyacht oligarch - JON NAZCA/REUTERS

Dmitry Pumpyansky’s superyacht once hosted luxury extravaganzas across the Mediterranean for the likes of supermodels and sports stars.

In 2015, Kendall Jenner celebrated her 19th birthday on the 240-ft, six-deck vessel, named Axioma, with Hailey Bieber (then Baldwin), Gigi Hadid and her sister Bella. They were joined by Lewis Hamilton after he finished third in the Monaco Grand Prix.

The $75m (£63m) superyacht boasts room for up to 12 guests, with an infinity pool, fitness centre, massage room, cinema and personal chefs.

But those star-studded parties in the French Riviera are currently on hold.

Within weeks, the Russian oligarch’s prized asset will become the first yacht offered up at auction since Vladimir Putin’s invasion of Ukraine. It comes after Pumpyansky was hit with sanctions by both the European Union and Britain in March, as part of an effort to crack down on those with close ties to Putin.

The yachting industry has been speculating for months about how the first auction triggered by the conflict will play out, and the sale of the Axioma will be a key test of how many buyers will pay for an asset once owned by a Russian oligarch.

Dimitry Pumpyansky - Mikhail Svetlov/Getty Images Europe
Dimitry Pumpyansky - Mikhail Svetlov/Getty Images Europe

Pumpyansky, who is estimated to be worth £1.8bn, started his career as a metals trader before setting up global steel pipe manufacturer TMK and investment company Sinara Group. The billionaire stepped back from both companies earlier this year.

In March, his superyacht was detained by the Gibraltar authorities after JP Morgan filed an admiralty claim in the territory's Supreme Court. The investment giant called in a loan on the yacht reportedly worth £18m, on the grounds that sanctions against the oligarch left him in breach of the loan agreement.

Foreign Secretary Liz Truss hailed the news, tweeting: “Welcome Gibraltar's seizure of Dmitry Pumpyansky's superyacht following UK sanctions.”

Now, JP Morgan is forging ahead with an auction within weeks after Gibraltar's Supreme Court ordered a sale to meet the claims of creditors. Experts predict it to go for a discount of up to 30pc.

Benjamin Maltby, marine barrister at Keystone Law, says: “This should happen reasonably quickly because Gibraltar is quite a popular place to arrest and sell trading ships, and occasionally yachts. It's something they do reasonably often so you would expect something sooner rather than later.”

He expects potential buyers will be confident to participate in the sale because it is a commercial process rather than political punishment meted out during the conflict. Buyers could be put off by any yacht auctions pursued by individual governments over fears oligarchs could try to reclaim their assets when the conflict ends.

“This is just a regular sale following a loan default. The reasons behind that obviously relate to the war in Ukraine, but the auction is ultimately a commercial sale,” Maltby says.

“That is significant because that sale should be recognised internationally. If the yacht is to be used in the Mediterranean then its previous owner shouldn't be a problem.”

Kirsty MacHardy, shipping lawyer at Stephenson Harwood, says: “The benefit of court auctions generally is that it cleans the title as well. If there are any other claims on the ship, those are cleaned off when it goes through the court. The new buyer doesn't have to take those on, for example a crew claim or other maritime liens. And that is important with a sale as public as this.”

Aside from what the Axioma offers for luxurious personal use, it also promises its new owner a weekly charter income of around €450,000 (£471,000).

Maltby says: “You can't just take any yacht and charter it, they need to conform with certain build and operating standards before they can be used commercially.

“But the Axioma has a track record as a charter vessel, so the new owner could put her straight on to the charter market and start earning some of that money.”

While potential buyers may be queuing up, the vessel is unlikely to sell for its estimated value of £63m.

“Even in today's buoyant market for yachts, it's very unlikely the Axioma will achieve her full market value,” Maltby says. “But it is almost certain she will be sold for more than the amount the bank is claiming they are owed.”

Hardy adds: “The superyacht market generally is very hot post-Covid, but it is difficult to say what will happen here.

“This is a distressed asset, and these yachts are also bespoke. My guess would be that a distressed asset will be sold around 20 to 30pc below open market value.”

Hardy warns that the kind of secretive billionaires usually interested in expensive yachts may also be put off by the publicility surrounding the Axioma.

“There are also reputational risks, and a lot of publicity. US billionaires are much more media shy than perhaps others,” she says.

“And because of the coverage, even if this is bought by a special purpose vehicle, everyone will be looking to see who is standing behind it.”