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For Sale: 1 Russian Business Empire (Offers Over $8 Billion Please)

Brooklyn Nets owner Prokhorov talks with the media about his decision to fire head coach Johnson, at half time of their NBA basketball game with the Charlotte Bobcats in New YorkBrooklyn Nets owner Prokhorov talks with the media about his decision to fire head coach Johnson, at half time of their NBA basketball game with the Charlotte Bobcats in New York
Brooklyn Nets owner Mikhail Prokhorov © Ray Stubblebine / Reuters REUTERS

A Russian tycoon who may have trodden on Vladimir Putin’s toes once too often has put his entire $8 billion business empire up for sale, according to one of the country’s leading business papers.

Mikhail Prokhorov, known in the U.S. for his ownership of the Brooklyn Nets basketball franchise, is looking to sell all the assets of his Onexim Group, including stakes in aluminium giant Rusal, potash firm Uralkali and power generator Quadra, among other firms.

Prokhorov has a net worth of around $8 billion, according to Forbes magazine. Onexim manages his assets. Dmitry Razumov, Onexim’s managing director, denied Vedomosti’s account to the news agency Interfax, but confirmed that “we are always talking about acquisitions and sales or about attracting partners for this or that asset.”

The news comes less than three months after Russian law enforcement officials conducted searches of Onexim’s offices, ostensibly in connection with a probe into a takeover by Onexim’s MFK banking subsidiary. Officials said the searches were related to a tax investigation. But at the time, two sources told Reuters they believed they were linked to Prokhorov’s RBC media holding, which had reported with a little too much gusto on the Russian angle of the ‘Panama Papers’ leak regarding global money-laundering.

RBC had zeroed in on Sergey Roldugin, a conspicuously rich cellist who happens to be the godfather of one of President Vladimir Putin’s two daughters.

The Kremlin said then it was “absolutely inappropriate” to link the searches to articles published by RBC.

Putin’s spokesman Dmitry Peskov, when contacted by Vedomosti, called claims Onexim was selling its assets on a recommendation from the Kremlin “sheer folly”.

Vedomosti’s sources, which included two people in Onexim Group, an acquaintance of Prokhorov and someone who had received an offer to buy several assets, did not say whether Onexim’s decision to sell up was linked to the searches in April.

Sources had told Reuters in June that Prokhorov was preparing to sell his stake in Quadra.

Onexim holds a stake of 17% in Rusal, one of the world’s largest producers of aluminum, and 20% in Uralkali, a dominant player in the niche market of potash fertilizers. The fate of those stakes could possibly trigger fresh struggles for control in a Russian natural resources sector that has witnessed some notoriously bitter battles over the years (although the level of outright violence involved has been on a downward path ever since the “Great Patriotic Aluminum War” in the 1990s).

In two months’ time, Russia is holding parliamentary elections, which will pose a tricky exercise in the ‘managed democracy’ that Putin runs. ‘United Russia’, the party that guarantees Putin’s majority in the Duma, routinely has lower popularity ratings than the President himself. Against the background of an economy which has been shrinking for over two years, it may struggle to win a majority, even with the help of tight censorship of broadcast media and the traditional covert disruption of opposition parties by law enforcement.

Prokhorov himself had come third when he ran as a liberal opposition candidate in the last presidential elections in 2012, but the party he set up, the Party for Civic Reform, has failed to build on that result since then.

Russia’s GDP fell by 3.7% in 2015 and is forecast by the World Bank to contract another 1.4% this year. Both the government and the World Bank expect it to return to growth next year, against a background of stable or slightly rising oil prices.