Abu Dhabi‘s Mubadala Investment Co. said the Russian Direct Investment Fund participated in its deal to buy convertible bonds of Telegram, even as the fiercely independent messaging app said it doesn’t want the Kremlin-controlled entity as an investor.
RDIF “participated in a minority capacity” through “the Russia-UAE joint investment platform,” Mubadala said in a statement Wednesday, noting they’ve made similar deals together in the past. The bonds give investors the right to convert them into equity when the company goes public at a discount to the initial offering price.
Telegram spokesman Mike Ravdonikas said that while RDIF hadn’t participated in the original sale, the state-controlled fund “appears to have bought a small quantity of Telegram bonds on the secondary market” in a separate deal over which the company had no control.
“Given that the rights of the bondholders are limited and bonds do not give the power to influence the values or the strategy of the company, we generally do not consider transactions in Telegram bonds on the secondary market an issue,” he said.
That statement came hours after an angry demarche from the app, which clashed for years with Russian regulators over giving up encryption keys.
“RDIF is not in the list of investors we sold bonds to. We wouldn’t be open to any transaction with this fund,” Ravdonikas said in an email late Tuesday. “The funds that did invest, including Mubadala, confirmed to us that RDIF was not among their LPs,” he added, referring to limited partners.
Mubadala and an Abu Dhabi joint venture it owns a stake in announced Tuesday they had each made a $75 million investment in the offering, but they didn’t mention the Russian fund. An RDIF spokesman said later it had participated “jointly with Mubadala,” declining to say how much it contributed. The two funds have a number of joint investment projects.
Telegram has over 500 million active users and has seen usage surge after major U.S. technology companies cracked down on conservative voices in the U.S. earlier this year. It was forced to raise funds to repay investors after an attempt at an ICO for its Gram cryptocurrency failed because of a ban imposed by the Securities & Exchange Commission.
“I am happy to share that Telegram has raised over $1 billion by selling bonds (a form of debt) to some of the largest and most knowledgeable investors from all over the world,” founder Pavel Durov said in a statement on the app that didn’t identify any of the buyers. “This will enable Telegram to continue growing globally while sticking to its values and remaining independent.”
Russian regulators attempted to block the service in 2018 when it refused to provide law enforcement with encryption keys to read messages. For two years, the company thwarted efforts to enforce the ban, including by changing IP-addresses to evade blocking, until Russia ultimately gave up last June.