Home News Economic crisis smarts, and transforms, Russia’s rich

Economic crisis smarts, and transforms, Russia’s rich

Published on 16/02/2009

Moscow -- The economic crisis has transformed the rankings of Russia's rich recently, with a technology tycoon now its wealthiest man and the former number one spot holder, Oleg Deripaska, now barely making the top 10.

Mikhail Prokhorov — a man seen by many as Russia’s most eligible bachelor and who is famous for his lavish lifestyle — is now Russia’s richest man, with a fortune of 14.10 billion dollars (11.0 billion euros), the report in weekly magazine Finans said Monday.

Over the last 10 years, Russia’s oligarchs had become notorious for building vast assets at extraordinary speed in the wake of the Soviet collapse. But the report showed that the economic crisis has hit them hard.

The number of Russian billionaires has been halved over the last year, as the rich battle against plunging asset prices and debts that were built up over good times were called in, the report said.

Deripaska has seen his fortune reduced by a factor of 10 within a year as the value of his assets fell. He must now rearrange debts with creditors, not least Prokhorov, the report said.

Technology mogul Prokhorov owns the Onexim company — one of Russia’s largest private investment funds — which deals mainly with the mining, nanotechnology and energy industries.

A keen sportsman, Prokhorov is now head of the Russian Biathlon Union, an organization that found itself under scrutiny this week when three Russian top athletes in the winter sport tested positive.

He profited in 2008 by selling 25 percent of the world’s largest palladium and nickel producer, Norilsk Nickel, to Deripaska in April, well before the global crisis struck and asset prices shrunk.

"Thanks to his successful exit from Norilsk Nickel just before the economic collapse, Prokhorov has earned himself the reputation of a guru," the magazine said.

Deripaska’s UC Rusal aluminum company owes three billion dollars in debt to Prokhorov.

And to make matters worse, Prokhorov also has a put option that would give him the right to demand a buy out of his 14-percent state in Deripaska’s UC Rusal for 7.3 billion dollars.

According to Finans, Deripaska’s fortune has dwindled to 4.90 billion dollars from 40 billion dollars the year earlier. He is now in eighth place in the magazine’s rankings.

"For the last months, the businessman has been solely preoccupied with intense and so far unsuccessful attempts to agree to a restructuring of billion dollar debts," the magazine noted.

World aluminum prices have plunged since the crisis broke out, while shares in Norilsk Nickel have lost a third in value. The Russian government has also agreed to help out Deripaska’s struggling automaker GAZ.

Roman Abramovich, who made his fortune in the privatization of the former Soviet oil business and who later bought Chelsea football club in 2003, was ranked second in the list with 13.90 billion dollars.

The Russian financial daily Vedomosti said on Monday that Abramovich had ploughed 710 million sterling (1.05 billion dollars) of investment into the football club since taking over.

Abramovich’s ex-wife Irina Malandina, who benefited from a multi-million dollar divorce settlement in 2007, also makes it onto the list in 122nd place, with an estimated fortune of 250 million dollars.

Third on the list is industrialist Vladimir Lisin and fourth is oil magnate Vagit Alekperov.

Stuart Williams/AFP/Expatica