Hyve Group, the company responsible for organizing popular events like Pure London and Spring/Autumn Fair, has recently announced its plans to sell its Russian business due to the ongoing war in Ukraine. The decision to dispose of the subsidiary comes as a result of several factors, including the moral and legal challenges associated with operating in Russia, as well as compliance and operational issues. The sale, which is still subject to approval from shareholders, lenders, and regulators, is set to be made to Rise Expo Limited for a maximum cash consideration of £72 million over a span of 10 years.
One of the main drivers behind Hyve’s decision is the feedback received from stakeholders, particularly customers who attend events outside of Russia. These customers have expressed concerns and have even threatened to boycott the company’s Western events if it continued its activities in Russia. Furthermore, the current political environment in Russia poses risks of expropriation or fraudulent business dealings. In addition to that, the company faces increasing risks under Russian law regarding local management compliance with international sanctions, as well as potential criminal liability under international sanctions and money laundering laws for the rest of Hyve’s companies, directors, and employees.
Despite the expected loss on the disposal of its Russian business, Hyve sees this strategic move as an opportunity to focus on growth opportunities in the US and Western Europe. By prioritizing markets with more favorable conditions, the management believes they can maximize their potential.
The decision to sell the Russian business coincides with the release of Hyve’s financial results for the first half of the year, which showed a substantial increase in revenue compared to the previous year. The gradual reopening of events worldwide following the pandemic has greatly contributed to this growth. In the first half of the year, the company reported revenues of around £58 million, a significant difference from the £5 million reported in the same period last year. Notably, these figures exclude the revenues from Russia, which amounted to approximately £17 million. Hyve attributes its success to the reopening of Western markets and the strong performance across key performance indicators, such as customer spend, visitor density, and Net Promoter Score (NPS).
In the UK, Spring Fair has shown positive momentum following the success of Autumn Fair in the previous year. Moving forward, the forward bookings for the rest of the year, excluding events in Russia and Ukraine, currently stand at £103 million. This reflects the pent-up demand for in-person events as major shows return, as well as the implementation of Hyve’s omnichannel strategy. Despite ongoing disruptions caused by the COVID-19 pandemic in certain regions and the challenges in the wider geopolitical environment, the company remains optimistic about the future.
Mark Shashoua, the CEO of Hyve Group plc, expressed his satisfaction with the return to a pre-pandemic level of events and the continuous pent-up demand from customer communities. He also emphasized the expansion of facilitated meetings across the company’s portfolio, with plans for further expansion in the second half of the year. This strategic approach aims to meet the evolving needs of customers and enhance the overall event experience.
In summary, Hyve’s decision to sell its Russian business is driven by a combination of factors, including the ongoing war in Ukraine and the challenges associated with operating in Russia. The company’s focus on growth opportunities in the US and Western Europe aligns with its long-term strategic goals. The positive financial results for the first half of the year indicate a rebound in sales as events resume post-pandemic. Hyve remains optimistic about the future and is committed to meeting the demand for in-person events while embracing innovative strategies to enhance customer experiences.
Useful links:
– BBC: Ukraine crisis
– Financial Times: Challenges of operating in Russia
