Russian oligarch buys potash stake 'for over $4 bn'

18th November 2013, Comments 0 comments

The Onexim investment vehicle of Russian billionaire Mikhail Prokhorov on Monday announced it was buying a 21.75 percent stake in potash giant Uralkali from his fellow tycoon Suleiman Kerimov.

Financial details were not disclosed but the business daily Vedomosti reported Monday that the transaction would value Uralkali at $20 billion, meaning Kerimov would receive $4.35 billion for his shares.

Onexim confirmed the purchase in a statement, saying the parties expected the transaction to close shortly.

"We are certain that the potash industry has strong fundamentals and that Uralkali, as the world's leading producer and the key player in the industry, has considerable potential for growth in value," said Onexim chief executive Dmitry Razumov.

Prokhorov, owner of the New Jersey Nets basketball franchise who challenged President Vladimir Putin in Russia's 2012 presidential elections, has a fortune of $13 billion and is the 10th richest person in Russia, according to Forbes magazine.

Kerimov meanwhile has a $7.1 billion fortune and is Russia's 20th richest man, according to the magazine.

However this year has proved tough for Kerimov who astonished observers by selling off all the major stars from his once hyper ambitious Russian Premier League Anzhi Makhachkala football side at the start of this season.

This saw one of the biggest mass sell-offs of quality footballers in recent times, with the team's former captain, the Cameroonian star Samuel Eto'o, joining Chelsea.

Belarus has meanwhile charged Kerimov with suspected abuse of authority in the same probe which has seen the chief executive of Uralkali, Vladislav Baumgertner, placed under house arrest in the Belarussian capital Minsk.

'Clearly a better option'

The offloading by Kerimov of his stake in Uralkali was seen as a condition for Belarus to resolve the Baumgertner legal issue and resume ruptured cooperation with Uralkali.

In a hugely turbulent period for Uralkali, the company announced in September that a Chinese state investment vehicle has taken a 12.5-percent stake in the firm.

Uralkali has a share of about 20 percent of global potash production. Potash is highly sought-after in fast-growing emerging economies like China as the fertiliser can be used to dramatically increase crop yields.

According to Vedomosti, two other private shareholders in Uralkali, Filaret Galchev and Anatoly Surkov, are also in talks to sell their respective stakes of 7 percent and 4.8 percent.

It said they could be bought by billionaire Dmitry Mazepin, owner of the Uralchem fertiliser company, who was born in Minsk and could help ease the tensions between the company and the Belarussian authorities.

Analysts welcomed Prokhorov's purchase and said the change in the shareholder structure could lead to the restoration of cooperation between Uralkali and Belarus state potash company Belaruskali which had been cut by Baumgertner and caused potash shares worldwide to crash.

"Credit-wise, Mikhail Prokhorov as a shareholder is clearly a better option than the other bidders, as we believe him to be unleveraged," analysts at VTB Capital said in a note to clients.

"Once Kerimov exits the company, discussions on restoring the oligopoly (between Belaruskali and Uralkali) could well be on the table," they added.

Prokhorov is one of Russia's most visible businessmen who staged a highly efficient campaign for Russia's 2012 presidential elections, coming a respectable third with eight percent of the vote.

Prokhorov's Civil Platform party in September enjoyed one of its biggest successes when its candidate Yevgeny Roizman defeated an official backed by the ruling United Russia part in elections for mayor of the Urals city of Yekaterinburg.

© 2013 AFP

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