Shah Capital moves its 6.72% VEON stake to a passive filing as a $200m buyback runs

Shah Capital Management and its founder reported beneficial ownership of 4,620,275 VEON Ltd. American depositary shares, or 6.72 per cent, in a Schedule 13G filed with the US Securities and Exchange Commission on 16 October, switching to the passive form of disclosure used by holders who do not seek to influence control. In an amendment to its Schedule 13D filed the same day, the investor said it had withdrawn its registration as an investment adviser on 16 October and that the reporting persons "no longer hold the shares with a purpose of influencing control".

The change comes while VEON, the Dubai-headquartered operator that says it serves more than 150 million connectivity customers in five countries, is buying back 3.9 per cent of its shares. In the corridor VEON owns Beeline Kazakhstan, which serves 11.7 million mobile customers and around one million fixed internet customers, according to a VEON release of 15 September. VEON announced on 23 September a programme to repurchase 72.5 million shares, worth about $200 million at the closing price of $69.37 per ADS on 22 September, and said it will cancel every share acquired, according to the press release furnished to the SEC. Neither Shah filing reports a sale of ADSs, and neither gives a figure for the holding before 16 October.

What the Shah filings say

The amendment attributes the change to a restructuring: a family office, Himanshu Shah Family Office LLC, has been set up to manage the investments of the Shah family, and Shah Capital Fund LLC, which holds 2,790,960 ADSs, or 4.06 per cent, has become part of that structure. Shah Capital Management is deemed to beneficially own 4,575,667 ADSs, or 6.65 per cent, held across the fund and managed accounts, and Himanshu Shah holds a further 44,608 ADSs directly, the 13D amendment shows. The reporting persons said they had "no present plans or proposals" that would result in any of the actions listed in Item 4 of the form.

The percentages are calculated on 68.8 million shares outstanding, the amendment states, a base that matches the number of ADSs rather than VEON's common shares. LetterOne's own filing uses a base of 1,849,190,667 common shares. Each ADS represents 25 common shares, according to the VEON release, and the Shah filings do not reconcile the two bases.

How the buyback works

VEON's programme combines open-market purchases of ADSs with direct purchases from LetterOne, its largest shareholder. Under a share purchase agreement signed on 24 September, LetterOne's holding company LPE Middle East Limited will sell VEON 32,957,830 shares, while 39,542,170 shares are to be bought in the market as ADSs, according to LetterOne's Schedule 13D amendment of 25 September. After each market tranche, LPE sells a matching proportion of its allocation at the weighted average price VEON paid for the ADSs in that tranche, divided by 25. Each tranche requires VEON's board to approve the cancellation of the shares.

The same filing puts LPE's holding at 840,625,000 shares, or 45.46 per cent of the voting capital, and LetterOne's allocation is 45.46 per cent of the 72.5 million shares to be bought. If the programme completes in full, LPE would hold 807,667,170 of 1,776,690,667 shares, still about 45.46 per cent, on Backhaul's arithmetic from the filing's figures. The agreement does not commit LetterOne to take part in any later or enlarged programme, the filing states.

VEON said the new programme represents 27.5 per cent of its trailing twelve-month equity free cash flow, after leases and licences, for the period to 30 June, and that it replaces the minimum annual buyback target of $100 million set in May 2025. Since August 2024 VEON has repurchased 4.46 million ADSs, 6.0 per cent of the ADSs outstanding, for $227.6 million, and shares and ADSs held by the company represent about 7.9 per cent of the total outstanding, according to the release.

What the documents do not say

VEON's release gives no end date for the programme and says the first phase of open-market purchases is under way without saying how many ADSs have been bought. No filing in VEON's SEC record between 23 September and 16 October reports a completed tranche or a board resolution to cancel shares. The release does not say how the buyback interacts with spending in the operating markets, and the Shah filings say nothing about VEON's business.

VEON's third-quarter results, due on 6 November according to a company announcement, are the next document likely to show how many shares the programme has bought and cancelled.