November 27, 2013 2:27 pm

Oligarchs profit from swapping assets

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With Uralkali’s change in ownership, Russia’s biggest potash producer moves from the hands of one rich and influential Russian oligarch to those of another.

Mikhail Prokhorov, the 6ft 8ins owner of the Brooklyn Nets basketball team, will become Uralkali’s new controlling shareholder, his investment group Onexim announced last week, taking over from Suleiman Kerimov, his longtime business ally.

Born to a middle class family in Moscow, Mr Prokhorov started out unloading bags of cement from Moscow rail cars and selling stonewashed blue jeans.

After the fall of the Soviet Union, he joined up with Vladimir Potanin, a fellow oligarch, to start Uneximbank, a private lender that eventually acquired control of Norilsk Nickel through Russia’s controversial loans-for-shares programme.

Mr Prokhorov sold his 25 per cent stake in Norilsk Nickel to Oleg Deripaska in 2008, right before the global financial crisis, for the hefty price of $7.2bn plus a 14 per cent stake in Mr Deripaska’s Rusal.

He received a further windfall this year when he sold his 38 per cent stake in Polyus Gold , the London-listed gold miner he owned jointly with Mr Kerimov, for $3.6bn. The buyers of Mr Prokhorov’s stake were Filaret Galchev and Anatoly Skurov, current minority shareholders in Uralkali.

In addition to his Rusal stake, Mr Prokhorov also owns assets in the Russian media, energy and property sectors. However, in recent years he has largely held back from new business deals to pursue politics.

Peace brings questions after potash war

The potash ‘war and peace’ saga between two of the world’s leading producers of the key crop nutrient appears to have reached its final chapter with the extradition of Vladislav Baumgertner, the chief executive of Uralkali, from Minsk to Moscow last week.

It was a relief for the top Russian potash group to get its executive back in the country, but industry executives and analysts are still on the edge of their seats to see how the story – which has captivated the industry and put the fertiliser on the front pages – is going to end.

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He ran for president in March 2012 against Vladimir Putin, garnering 8 per cent of the vote, and four months later founded his own political party, Civic Platform. While he has modelled himself as a candidate for Russia’s urban liberals and occasionally speaks out against Kremlin policies, Mr Prokhorov has been criticised by some corners of the Russian opposition who believe the billionaire has the implicit support of the regime.

Mr Prokhorov’s decision to enter Uralkali is only good news for Mr Kerimov. The native of Russia’s restive Dagestan region, and Russia’s 20th richest man according to Forbes, managed to double his investment during his three years as Uralkali’s biggest shareholder, buying in at a valuation of $10bn for the whole company and selling out at a valuation of $20bn.

Mr Kerimov, who made his fortune using state-backed loans to acquire stakes in some of the biggest Russian blue-chips, may now be looking to exit some of his other biggest holdings as well.

On Tuesday Russian daily Kommersant reported that Mr Kerimov was in talks to sell his 36 per cent stake in Russian property group PIK, while this summer representatives for Mr Kerimov said the billionaire was looking to reduce significantly his annual spending on Anzhi, the Dagestani football club.

A Moscow investment banker familiar with the matter said Mr Kerimov was now in the process of selling “some other minor assets” with the goal of focusing on Polyus Gold.

Already there are signs that changes at the gold miner are afoot. On Friday, the company announced its chief executive German Pikhoya was stepping down, amid local news reports that the executive had clashed with Mr Kerimov.

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