A fund set up by a sanctioned oligarch has been ordered to sell a British broadband company because of national security concerns.
LetterOne, which was founded by the Ukrainian-born billionaire Mikhail Fridman in 2013, has been ordered to sell Upp, the company behind a £1bn project to roll out full-fiber broadband in East Anglia.
Grant Shapps, the Business Secretary, said the move was necessary to prevent, remedy, or mitigate the risk to national security.
Upp will be required to complete a security audit of its network prior to the sale.
Mr Fridman and his Russian business partner Petr Aven were forced to step down from LetterOne after they were hit by EU sanctions following Russia’s invasion of Ukraine earlier this year.
The EU said in February that Mr Fridman “actively supported materially or financially and benefited from Russian decision-makers responsible for the annexation of Crimea and the destabilization of Ukraine.”
The pair have had their stakes in LetterOne frozen and are unable to sell their shares or receive any financial benefit while under sanctions.
LetterOne bought Upp, formerly known as Fiber Me, in June last year. It marked the investment group’s first move into the UK’s telecoms market.
The deal sparked a backlash from Tory MPs concerned about Mr Friedman’s ties to Vladimir Putin.
Mr Fridman has denied links to the Kremlin and branded sanctions “unfair”.
A spokesman for LetterOne said: “LetterOne is disappointed by the decision reached by government that requires LetterOne to divide Upp.
“L1 is not sanctioned and has taken fast, decisive action to put in place strong measures to distance L1 from its
“They have no role in L1, no access to premises, infrastructure, people and funds or benefits of any description.”
LetterOne said Upp had processes in place to remove any perceived threat to national security, adding: “We believe that L1 ownership of UPP is not a threat to national security in any way.”
The London‐based fund, which also owns Holland & Barrett, has been racing to distance itself from Russia.
In October it inked a deal to buy back almost £900m of debt from Holland & Barrett’s lenders amid concerns about possible exposure to sanctions.