Rushin’ to sell off his stakes
Prokhorov’s in retreat
Brooklyn Nets owner Mikhail Prokhorov is saying “nyet” to his Russian portfolio.
After Kremlin insiders came down on the one-time oligarch this spring for investigative reports by his media company on the business interests of close relatives and friends of President Vladimir Putin, Prokhorov planted the “for sale” sign on most of his properties.
Hours later, the Russian billionaire got word from staff in Moscow that masked agents of the Federal Security Service had raided the offices of his headquarters and other companies — an apparent sign of dissatisfaction at the highest levels.
Soon after the crackdown, Prokhorov sold his main Russian holding, a $2 billion stake in a fertilizer company. The biggest of what remains, a $900 million holding in aluminum giant Rusal, is now on the block.
If that sale goes through, his most valuable investments would no longer be in Russia but in and around his adopted home, Brooklyn.
In addition to the Nets and the Barclays Center arena, Prokhorov holds leases on several other entertainment venues there. Outside estimates value them at $2.2 billion, while Prokhorov’s staff puts the figure at about $3 billion, according to two people close to the company.
His remaining Russian assets — some of which, like the Rusal stake, are likely to be sold — are worth $2.3 billion, according to estimates. Another estimated $5.7 billion is in cash.
Prokhorov’s shift highlights the difficulty even the most experienced and powerful businessmen face in staying on the right side of the ever-changing line that the Kremlin defines as loyalty.
Some billionaires, like Roman Abramovich and Mikhail Fridman, years ago moved substantial holdings to Europe or the US, where the rules of the game are more predictable. Others, like oil tycoon Mikhail Khodorkovsky, have faced criminal charges in Russia and were forced to cede their assets to the state.
Such risks are a big reason why local businesses remain reluctant to commit capital even as President Putin exhorts tycoons to invest to help revive the economy.
“Prokhorov has always stayed within the boundaries” and has benefited from his close ties to the authorities, said Gleb Pavlovsky, a former Kremlin adviser who now heads a political consultancy in Moscow. “But uncertainty is rising and that’s not Prokhorov’s element.”
Dmitry Razumov, the chief executive officer of Prokhorov’s Onexim holding company, said in emailed comments the sales have long been in the works and that some proceeds will be invested in its Russian finance and energy businesses.
“We have no plans to sell off all our Russian assets,” he said. “Quite the opposite is true.”
“Onexim’s current investment strategy is not about geography, but rather liquidity and maintaining a smart portfolio,” Razumov said.
The company’s focus is on assets where it has controlling stakes and a strong management role, he said. A spokeswoman said Prokhorov spends most of his time in Russia and doesn’t own a home in the US, staying at the Four Seasons hotel when he’s in New York.
Prokhorov, 51, got his start in business selling jeans in the twilight of communism and built his fortune in the 1990s with Vladimir Potanin, an acquaintance who worked in foreign trade.
The pair started a bank and later bought control of Arctic metals giant GMK Norilsk Nickel in a controversial privatization auction.
Prokhorov declined to be interviewed for this article.