Mikhail Fridman. The history of the creation of Mikhail Fridman's business empire. Mikhail Fridman now
Biography
State
Partners
Competitors
Area of interest
Personal life
Biography
His parents worked as engineers at a factory, and his father was even awarded a state prize for developing identification systems for military aviation. After school, Mikhail decided to follow in the footsteps of his parents - he went to Moscow to enter the Physico-Technical Institute.
He passed the exams with flying colors, but did not pass the competition; after failure he returned to Lviv, worked as a laboratory assistant at the Institute of Physics and Mechanics and was preparing for his second attempt - he had a year left before the army. But a year later, history repeated itself. Then Friedman easily entered the Institute of Steel and Alloys, faculty of non-ferrous and rare earth metals. At the institute he studied at the faculty of Semiconductor Materials and
instruments together with his cousin Dmitry Lvovich Fridman. In his 3rd year, Mikhail Fridman organized the informal youth club “Strawberry Polyana” - a prototype of modern nightclubs. At the institute he was one of the leaders of the student
"Theater mafia", students who resold tickets to the Bolshoi Theater.
In 1986-1988 works as a design engineer at the Elektrostal plant in the city of Elektrostal, Moscow region.
In 1988 Together with his institute friends, Friedman organized the Courier cooperative, which specialized in window cleaning.
Since 1988 Mikhail Fridman is a private entrepreneur, the founder of the Alfa Photo company, which was engaged in very diverse activities: selling computers, copying equipment and even exotic handmade oriental carpets.
Since 1989 - took up the post of director of the Alfa-Eco joint venture, 80% of the capital of which belongs to the Courier cooperative and 20% to the Swiss company ADP Trading
According to media reports, Alfa-Eco’s participation in operations to convert rubles into dollars made a significant contribution to the replenishment of capital.
In the early 90s. Alfa-Eco was involved in the sensational “Fischer case” of $140 billion. As a result of the investigation of this case by law enforcement agencies, many transactions had to be curtailed.
In 1990 - created by Alfa Capital.
Since 1991 - Chairman of the Board of Directors of Alfa Bank.
From 1995 to 1998 - Member of the Board of Directors of CJSC Public Russian Television (ORT).
Since 1996 - Chairman of the Board of Directors of the Alfa Group consortium.
Since January 1996 - founder and vice-president of the Russian Jewish Congress (REC), head of the RJC Culture Committee.
Since 1996 - member of the board of directors of OJSC SIDANCO Oil Company.
Since October 1996 — Member of the Banking Council under the Government of the Russian Federation.
In 1998 After the merger of Alfa Bank and Alfa Capital, he became Chairman of the Board of Directors of Alfa Bank.
Since 1998 - Member of the Board of Directors of CJSC Trading House Perekrestok.
In February 2001 included in the Entrepreneurship Council under the Government of the Russian Federation.
Since 2001 — Member of the Bureau of the Board of the Russian Union of Industrialists and Entrepreneurs
Condition
Summer 2001 Mikhail Fridman was included in the list of the richest people on the planet compiled by Forbes magazine. The magazine estimates Friedman is worth $1.3 billion.
Based on the results of 2002. the same magazine estimated Mikhail Fridman's fortune at $4.3 billion. According to Kommersant, the total amount of funds controlled by Fridman in 2001. was $1.8 billion. According to EuroBusiness magazine (UK), Mikhail Fridman's fortune (2002) reached 2.5 billion euros.
Mikhail Fridman owns approximately 70% of Alfa Group's total assets.
For 2001-2002 Alfa Group acquired new assets: Alfa-Eco bought a 37.5% stake in the Volgograd plant “Red October”; the insurance company Alfa-Garantiya received a license for 37 types of insurance activities; Alfa Capital buys the insurance company Ostra-Kyiv; Alfa Bank receives permission from the Antimonopoly Committee of Ukraine to acquire a controlling stake in Kievinvestbank; Alfa-Eco, one of the largest alcohol producers in Russia, bought a 50% stake in the trading house P.A. Smirnov and Descendants in Moscow.
Lobby
Today, people from Alfa Bank and the Alfa Group work in the structures of the Russian government and in large private companies. In particular, Vladislav Surkov was Deputy Chairman of the Board of Alfa Bank, and currently holds the post of Deputy Head of the Administration of the President of the Russian Federation; Alexander Abramov was the head of the department at Alfa, now he is the deputy head of the presidential administration of the Russian Federation; Andrey Popov in the 1990s. worked at Alpha, then was a deputy of the State Duma of the Russian Federation, currently heads the Main Regional Directorate of the President of the Russian Federation; Andrey Rappoport in 1991-1996. was the chairman of the board of Alfa Bank, then worked at YUKOS, and now is the first deputy of Anatoly Chubais at RAO UES of Russia.
Gleb Fetisov, delegated from the Voronezh region, works in the Federation Council. Before that, he worked for quite a long time at the Alfa-Eco company.
In 1998 Oleg Sysuev, who left the Administration of the President of the Russian Federation, became the first deputy chairman of the board of directors of Alfa Bank. Partners The main partner of Mikhail Fridman is the president of Alfa Bank, Petr Aven. The main partner of the Alpha group is Renova, controlled by Viktor Vekselberg, chairman of the board of the Tyumen Oil Company and co-owner of SUAL-Holding.
A partner of Alfa and its owners and manager is also Dmitry Zimin, founder and president of VimpelCom OJSC, in which Alfa structures control 25% plus 1 share.
Competitors
The main competing structure of Alfa Group is the MDM group. In particular, two oligarchic structures fought for a long time for control over OJSC Tagmet. Alfa Bank fought with MDM Bank for Converse Bank. After the resignation of Alexander Rumyantsev (Minister of Nuclear Energy, MDM supporter) in the spring of 2001. Nuclear workers, with the support of Alfa Bank, began to fight to regain control of Converse, but MDM managed to increase its stake in Converse to 85% and emerge victorious.
Area of interest
Telecommunications
Recently, the telecommunications sector has been highlighted among Alpha’s priorities. At the beginning of 2001 A telecommunications department was created at Alfa-Eco, headed by Stanislav Shekshnya, a specialist in this field. During the year, a controlling stake in OJSC Golden Telecom and a blocking stake in OJSC VimpelCom were purchased.
Alfa-Telecom LLC (a division of Alfa Group) in the summer of 2002. gained control of 32.39% of the shares of Kyivstar GSM by purchasing a 50.1% stake in the Ukrainian company Storm, which owned 32.39% of the shares in Kyivstar GSM.
Oil and gas
Alfa, together with Renova, controls the Tyumen Oil Company, which is actively expanding in the Russian and foreign markets for both the production and sale of oil and petroleum products. In particular, in 2002-2003. TNK has been and is fighting for control over Slavneft. TNK needs new oil refining capacities and gasoline sales networks. TNK also aims to become a large independent gas producer. TNK, together with Yukos, controls the gas production company Rospan International and is considering plans to increase gas production and sales; it is especially interested in the export of this fuel.
Financial services.
Alfa Bank and Alfa Insurance are each among the leaders in their sector, actively capturing new market niches and regions.
Pipe and metallurgical industry
Versions about the purchase of the Ukrainian company Interpipe by Alpha structures have not yet been confirmed, but since the beginning of 2003. it was headed by Russian manager Evgeny Bernshtam, who before his new appointment worked as first deputy chairman of the board of Alfa Bank.
Consumer market, retail business, food
Alpha structures since 1994 owns a controlling stake in CJSC Trading House Perekrestok. United Food Company is an agricultural sub-holding of the Alfa Group consortium. The company controls eight sugar factories in the Krasnodar region, Oryol and Belgorod regions and 10 elevators, which store about 30% of the grain grown in the Krasnodar region.
Personal life
According to the stories of his colleagues, Mikhail Maratovich has a high efficiency. Any employee can enter Friedman's office - Friedman's business principle: "If a person believes that he should tell me something personally, he should have such an opportunity." He loves to travel, and jeep racing is especially revered. In 1997, while crossing the desert in Brazil, Friedman overturned his car and severely injured his head. The wife, a fellow student and dorm roommate before marriage (according to other sources, the dorms at MISiS are separate), lives permanently in Paris with her two daughters Katya and Laura. According to rumors, Friedman maintains virtually no contact with his wife. After the scandal with the wife of Alexei Mordashov (Mordashov’s wife sued the head of Severstal for the division of property), Mikhail Fridman allegedly urgently increased the allowance for his family. Parents permanently reside in Germany. Their narrow circle of personal contacts includes Yulia Gusman, Mark Rozovsky, Marat Gelman and Evgenia Albats.
Mikhail Maratovich Fridman is one of the most famous and prominent businessmen in Russia. He is the founder and head of the supervisory board of the famous Alfa Group consortium. In addition, he is on the board of the Russian Union of Industrialists and Entrepreneurs, the Public Chamber of the Russian Federation, the Presidium of the Jewish Congress and heads the Conference of Jewish Organizations of the Russian Federation.
Citizen of Israel. Lives permanently in London. Wikipedia indicates that in 2013 his fortune was $16.5 billion; today the official Forbes website estimates his capital at $14.6 billion.
Born in Lvov, into a family of engineers. Birthday: April 21, 1964. I studied well at school and graduated with one B. After two failures when entering MIPT, he became a student at MISiS, who successfully graduated. He and his future wife studied in the same course at the Faculty of Rare Earth and Non-Ferrous Metals.
His legal wife, Olga Fridman, he divorced from her more than 10 years ago. They have two daughters Katya and Larisa, students at Yale University. The children live with their mother in Paris. Mikhail communicates little with his ex-wife, but the family regularly receives good financial support from him. Despite his advanced age, he is not officially married.
Business
According to numerous articles in the media, he took up entrepreneurship while still a student, like many of his fellow students. The history of the creation of Alfa Bank and Alfa Group begins in 1992.
Alfa Group gradually grew through the acquisition of X5Retail Group N.V. (Perekrestok and Pyaterochka stores). Currently, the consortium also includes Rosvodokanal and the investment company A1.
Letter One Holdings was created exclusively for the foreign business of the consortium, to which shares of Wimpelkom and Turkcell (cellular communications) were also transferred.
At the beginning of this year, Letter One bought RWE Dea (a German oil and gas company), and the latest news that it was buying gas and oil assets in the Norwegian North Sea from the German energy concern E.ON was published in October by Forbes.
Currently, Mikhail Maratovich is the main owner of Alfa Group and Letter One Holdings, of which he is the chairman of the board of directors, and owns the brands Beeline, Perekrestok, and Pyaterochka.
Alfa Capital and Alfa Bank
In the early 90s, friends founded the check fund Alfa Capital and Alfa Bank. The bank began to develop rapidly in all directions, and by the early 2000s it had become universal and one of the largest among private credit institutions in terms of assets and equity capital. He was one of the first to trade Eurobonds.
1998 Alfa Bank merged with Alfa Capital, and Perekrestok joined this group. Alfa Group some time later also became the owner of a controlling stake in VimpelCom.
Experts consider the driving force behind the development of the bank to be Peter Aven, a former member of the Government, who, at the invitation of Mikhail, became President of the financial organization. Today Alfa-Bank's assets amount to more than 1.85 billion rubles.
Several years ago, a scandal broke out between Alfa-Bank and Oleg Yakovlev, owner of the Banana Mama chain and co-owner of Eldorado, over the non-repayment of a large loan. Alfa-Bank opened a criminal case for theft of funds. O. Yakovlev was put on the international wanted list. He was forced to write an open letter to M. Friedman with a request to stop harassment by the bank and not to post his photo in the entrances of the house.
Friedman's main brainchild, Alfa-Bank, is engaged in charitable activities, financing the Life Line Foundation, which helps children with heart disease. In 2014, the bank held an open music festival near Nizhny Novgorod, Alfa future People, which was presented by M. Friedman himself. The jazz festival that Alfa Bank planned in Lviv did not take place due to hostilities in Ukraine.
Secrets of success
One of the main secrets of Mikhail Fridman’s success can perhaps be called his persistence and consistency in achieving his goals, his desire for financial independence, which manifested itself during his student years. He himself believes that he understands people well, feels their character, has accumulated extensive experience in communicating with those on whom the result depends, and this helps him avoid failures and major scandals.
In an interview with Oleg Tinkov (journal.tinkoff.ru), Mikhail Maratovich shared the secrets of his success. In his opinion, entrepreneurial talent is 80% inherited and only 20% acquired. Not everyone can start their own business, but everyone can learn to manage their own finances.
Today there is an unplowed field in the field of digitalization. These are new technologies that can fundamentally change society. In order to become successful in this business, you do not need a large initial capital, you only need talent and perseverance. The main thing is a good head and the right character. The potential for possible advances in this area is enormous.
The crisis increases the chances for those who want to start their own business with little money. Assets depreciate. If a person has talent, he sees a lot of opportunities that can be realized with minimal initial investment. All you need is brains, perseverance, and talent.
If you have a business, it needs to be diversified. In the oil and gas market, successful firms are moving towards the development of environmentally friendly and renewable energy sources, and this should be taken into account. Clean water could soon become as speculative a commodity as oil.
Business is complex in terms of understanding and predicting human nature: consumer behavior, political changes. To be successful, you need to have a good understanding of people, love to communicate with them, and be psychologically stable in everyday life, confrontations and struggles.
As for the future development of banks, their payment functions may go to digital technology companies or mobile operators. There will be no banks in their modern form. They will be left with more complex things, such as credit analysis and credit operations. Banks will gradually become purely credit institutions.
When asked what motivates him to work with such a huge fortune, M. Friedman said that God distributes abilities to people unevenly, but the task of each of us is to use them to the maximum extent. We must “fix the world”, make it a little better. This is interesting to him, this is exactly what he does. He constantly tests himself, what he is capable of, these challenges are the motivating factor.
On the evening of January 14, 2011, billionaire Mikhail Fridman, CEO of TNK-BP, was watching a news broadcast on TV in his office with his deputy Maxim Barsky. The President of Russia is on the screen Vladimir Putin, Head of BP Robert Dudley, Deputy Prime Minister and Chairman of the Board of Directors of Rosneft Igor Sechin and Rosneft President Eduard Khudainatov signed an agreement on a global strategic alliance. After the deal, Rosneft was to become the owner of 5% of the shares of one of the largest oil companies in the world in exchange for 9.5% of its shares. The partners also agreed to create a joint venture to work on the Arctic shelf.
“Well, let’s go to court,” Friedman said to Barsky after watching the news. The shareholder agreement between the owners of TNK-BP - British BP and the AAR consortium (Alfa Group, Access Industries, Renova) - implied exclusive work in the Russian oil market without the participation of third parties. “How to go to court? - Barsky was surprised. “We live in Russia, they can take everything away!” “Well, what can we do, then we’ll fight,” Friedman shrugged.
Alpha is no stranger to suing. And two months later, the Stockholm arbitration court banned the deal between BP and Rosneft. This put an end to the already tense relations between the Russian and British owners of TNK-BP. On March 21, 2013, Rosneft bought TNK-BP and became the world's largest public oil and gas company in terms of production volumes and raw material reserves.
Sechin organized the “deal of the century”, who left the government in advance and headed Rosneft. The purchase of TNK-BP took place at the peak of oil prices: the state-owned company paid a record $56 billion for its greatness. Now, when energy prices have collapsed, the entire Rosneft is worth $46 billion - less than what AAR and BP received. Friedman and the company invest the proceeds from the sale mainly abroad. So far, they have invested $5.7 billion in the oil sector - in March 2015 they bought the German oil company Dea.
Igor Sechin and Mikhail Fridman have radically different approaches to life, business, and the state. Take oil prices, for example. We need to get used to low oil prices, Friedman wrote in his article in the Financial Times. Prices will still rise, you just need to wait, Sechin retorted in the same publication. Which one of them won?
Sechin and Friedman are absolute antipodes, although both have a huge influence on the Russian economy and both wanted to become part of the global economy, just in different ways, says their mutual friend. Friedman had long had ambitions to become an international businessman. This could have happened if he had exchanged his Russian oil assets for a stake in some global company, for example BP. Two businessmen familiar with Fridman said that even Putin allegedly supported his intentions regarding BP, because Russian investments in the West could be an instrument of political influence.
But Friedman made a global mistake - back in the 2000s he ruined his relationship with Robert Dudley, the future CEO of BP, and closed his way to BP, without knowing it, explains one of the interlocutors.
In the 1990s, BP came to Russia and behaved like a colonialist. This is how global oil and gas giants behave in any third world country, but in Russia they did not succeed with this approach, recalls a former TNK-BP employee. “They thought that if they had an agreement with the government, they could develop without any problems. But it didn’t work: problems regularly arose with Russian partners,” he emphasizes. At the same time, BP still considered Russia as an important market. She needed a partner with lobbying resources. The Alfis, seasoned in battles for oil assets, in turn, needed an international investor. “It was a kind of insurance against a hostile takeover by the state, and it worked,” says Ivan Mazalov, head of the Russian representative office of Prosperity Capital Management, one of the largest minority shareholders of TNK-BP [The Prosperity Capital Management Limited fund was created by Swedish military intelligence officer Mattias Westman, who was involved in intelligence and recruiting work in Russia. The director of Prosperity is a native of St. Petersburg, Alexander Branis - Ruspres] . In 2003, Alpha, Access Industries, Renova, on the one hand, and BP, on the other, merged their assets into TNK-BP.
There were always disagreements after the creation of the company, recalls a former TNK-BP employee. Development plans, what assets to acquire, what to invest in and what not - any issue became a battlefield. They even argued about dividends: before the accident on a BP drilling platform in the Gulf of Mexico in 2010, the British often proposed cutting dividends in favor of investment. After the accident, BP urgently needed money, and the situation changed exactly the opposite.
Traditionally, BP has had a stronger influence on the company. And although ownership was parity, and shareholders were equally represented on the board of directors, the position of general director was assigned to BP in the shareholders agreement. The head of TNK-BP, Robert Dudley, is described by people who knew him during his time at the Russian-British oil company as a “smart, adequate, positive” person. A true democrat: he rode with everyone in the elevator, recalls one of the former employees. But the last year of his work in the company, 2008, was especially difficult; Russian shareholders literally squeezed Dudley out from the company to gain more influence over management.
Harassment, searches, refusals to issue a visa - Dudley admitted to his inner circle that, against the backdrop of everything that was happening, it began to seem to him that the employees were laughing at him behind his back. At one time, Dudley even had to manage the company from some secret place. Putin publicly commented on the conflict between the AAR and BP. He stated that he warned TNK-BP shareholders about possible problems when the company was just being created: the 50/50 parity structure does not work. “Agree among yourselves so that one of you has a controlling stake. We don't mind it being VR. We will support if it is the Russian part of a joint venture - a TNK, but there needs to be an owner, and when there is no clearly defined authority, there will be problems in such a structure,” he said on May 31, 2008 in an interview with the French Le Monde.
Dudley eventually left TNK-BP. And BP itself began to think about leaving Russia, a source in Rosneft assures. “In fact, in many ways, what Rosneft later acquired TNK-BP, became the only way to preserve BP in Russia,” he says. But this was not the determining factor in BP’s relations with Russia. Dudley was named as one of the contenders for the post of CEO of BP back in 2006, but the position eventually went to Tony Hayward. And when Hayward left after the accident in the Gulf of Mexico in 2010, Dudley, who took his place, wanted to somehow respond to his offenders from Russia, one of the interlocutors believes: “As soon as Dudley headed BP, for Friedman, no matter what he was , the prospect of any deal making him a shareholder in BP was closed - Dudley simply would never allow that.”
Sechin's ambitions
Dudley signed an “Arctic” deal with Rosneft, absolutely deliberately violating the shareholder agreement with AAR on TNK-BP, one of the interlocutors believes. In his opinion, the head of Verkhovna Rada saw Sechin’s ambitions very well and played on his desire to “crush everything around him.” Maxim Barsky, who today heads the Matra Petroleum company, said that before signing the agreement with Rosneft, Dudley flew to Moscow several times and, behind the backs of the Russian shareholders of TNK-BP, met with the management of Rosneft.
On the day the deal with Rosneft was signed, Dudley visited the office of his Russian partners in TNK-BP. Alfa co-owner German Khan and Barsky met with him. By this time, they already knew about the impending deal, but Dudley had no idea about it. “And Dudley told us that he was going to exchange shares with Rosneft. “Do you mind?” “No,” we answered, “I don’t mind.” And not a word about the Arctic. Then I couldn’t stand it and said to him: “Well, don’t you want to tell us anything about the Arctic?” He replied that nothing was known yet. And so he left us, and in the evening he signed this agreement with Rosneft,” recalls Barsky.
Friedman wasn't kidding when he threatened to sue Dudley after watching the news on TV. At that time, he served as CEO of TNK-BP, the company's legal department was completely under the control of Russian shareholders, and this legal department smashed British lawyers to smithereens in court. The main argument was the fact that BP did not offer TNK-BP to participate in the “Arctic” deal with Rosneft. “If they had offered, we would have agreed, because it was a very promising story at that time,” says Barsky.
After the decision of the Stockholm Arbitration, BP was forced to invite TNK-BP to take part in joint work in the Arctic. After this, the board of directors of TNK-BP constantly met and discussed whether to go to the Arctic together with BP and Rosneft. Four representatives of the AAR were in favor, recalls Barsky, and four representatives of BP on the board of directors reasonably remarked: “What do you understand in the Arctic, you won’t be able to work there.” One of the independent directors, Alexander Shokhin, was on the side of AAR, the second, James Lang, was on the side of BP. The decisive vote was the third independent director - the former Federal Chancellor of Germany Gerhard Schroeder, and the parties fought for him, Barsky recalls.
Schroeder really found himself in a difficult situation and was waiting for a political signal. In one of the interviews, Putin was again asked about the conflict in TNK-BP, and he replied that all disagreements must be resolved through a shareholder agreement. For Schroeder, this was a signal - and TNK-BP voted to participate in the project. Rosneft’s deal with BP essentially fell apart immediately, recalls Barsky. Rosneft needed BP technologies for working on the shelf, but not a troubled partnership with Alfa.
The Stockholm Arbitration Court allocated two months to resolve all controversial issues regarding the “Arctic” deal, otherwise it simply would not have taken place. Rosneft had only a few days left, and then Sechin proposed to the AAR consortium to sell its stake in TNK-BP, although initially this option was not considered at all. A day before the deadline, Friedman had a buyout offer on his desk, which was generally acceptable to AAR. But Sechin set a condition: first, AAR must withdraw the claim from the Stockholm Arbitration Court and only then sign documents on the sale of a stake in TNK-BP. Friedman suggested the reverse procedure.
“That was the key moment. Igor Ivanovich then said: here is the Deputy Prime Minister, I give you my word, go, take [the documents from the Stockholm Arbitration], there are only a day left,” recalls an eyewitness of those events. There were disagreements within the AAR on this matter, “not everyone has nerves as steely as Friedman.” As a result, the consortium supported Friedman's position, and none of the transactions took place. In June 2011, in an interview with The Wall Street Journal, Sechin said that the main loser in the situation with the cancellation of the “Arctic” deal was the AAR, that the question was not about “revenge or punishment” of the AAR, and wished them “every success.”
And although the conflict between Russian and British shareholders did not end there, it was the dispute over the Arctic that laid the foundation for the future “deal of the century”: the unstable “50/50” structure has finally outlived its usefulness. Due to the ongoing corporate conflict, TNK-BP was practically paralyzed, and someone had to leave. For almost two years, AAR, BP and Rosneft discussed who would leave and under what conditions. In October 2012, Igor Sechin reported to Putin that the state company was buying out all of TNK-BP, and BP would become a shareholder of the merged company. The President approved this plan.
Help for traders
Friedman is a businessman to the core: cold, calculating, cynical. Many people who know him note his insight and intelligence. He always emphasized that he was engaged exclusively in private business and avoided, for example, the sphere of government procurement. Friedman, who is not closely associated with state-owned companies and political figures, always speaks of the authorities with respect. And Sechin was an effective deputy prime minister, he made decisions in the interests of the state, very correct decisions, says one of the acquaintances of the Rosneft president. Sechin equated Putin’s will, state security and the public good. After the purchase of TNK-BP, a lot has changed.
In the spring of 2015, Bloomberg, citing sources from among the advisers to the President of Russia, wrote that a crack was emerging in the relationship between Vladimir Putin and Igor Sechin, allegedly due to the huge debts of Rosneft, constant requests for state support and tax benefits, as well as due to the collapse of the exchange rate ruble after the placement of the company's bonds in December 2014. And although there is no real evidence of Sechin’s disgrace, the fact remains that Rosneft has huge debts, and it itself is worth less than it once paid for TNK-BP.
“Company capitalization is an unrepresentative indicator, especially in Russia and especially in the current conditions. It reflects country risks to a greater extent than the state of the company. The company needs to be assessed based on fundamental indicators, emphasizes Rosneft Vice President Mikhail Leontyev. - And these are not only production volumes and reserves, these are also qualitative indicators: production costs, debt burden. "Rosneft has today returned to the level of debt burden that it had before the purchase of TNK-BP." Before the deal, Rosneft's debt to EBITDA ratio was 1.17, and at the end of the third quarter of 2015 (latest data for March) - 1.61 in rubles and 1.27 in dollars. The large foreign currency debt, as the company itself has repeatedly noted, is regularly paid off. This is true, but there are nuances.
Rosneft's net debt at the end of the third quarter of 2015 was $24.5 billion, the total debt was $47.5 billion. This does not take into account pre-export financing - Rosneft does not include it in the total debt. Therefore, the real debt burden is much higher. In the third quarter of 2015, Rosneft showed in its financial report that it received almost 1 trillion rubles from “the world’s largest oil trading companies,” or approximately $16 billion. What are we talking about? It all started with the purchase of TNK-BP.
The world did not have enough money to buy TNK-BP, a former employee of one of the global oil traders sneers. In November 2012 - February 2013, Rosneft borrowed $31 billion from foreign banks and placed Eurobonds for $3 billion. Approximately $10 billion was missing. This money in the form of pre-export financing for Rosneft was provided by the world's largest traders Glencore and Vitol in exchange for supply of 67 million tons of oil over five years: Glencore - 46.9 million tons and Vitol - 20.1 million tons. The seller and buyers did not disclose the value of the contracts, but at prices more than $100 per barrel, such a volume of oil would cost at least $49 billion .
A former employee of one of the trading companies says that traders actually received a significant discount to the market price. Oil deliveries and repayment of pre-export financing are carried out through specially created companies (SPVs) Ros-GIP (Glencore) and Ros-Vit (Vitol) - both companies are included in the rating of the largest buyers of Russian oil (see page 233). It was by structuring the deal to purchase TNK-BP that Rosneft tested a new way of working with traders.
In June 2013 "Rosneft" entered into a similar contract with Trafigura with an advance payment of $1.5 billion and the supply of 10 million tons of oil over five years. In February 2015, another contract was concluded, the terms of which are unknown, but the supply volume exceeds 15 million tons, and the prepayment allowed Rosneft to pay more than $7 billion as part of debt repayment against the backdrop of US and EU sanctions. Similar agreements were signed with the Chinese China National United Oil Corporation (a subsidiary of CNPC) and Tonner S.A.R.L.
On September 7, 2015, at a conference in Singapore, Igor Sechin, seeing Jonathan Kollek, the former vice president of TNK-BP and now the head of Trafigura Eurasia, kissed him on both cheeks, which the Financial Times saw as evidence of the deepest ties between the Swiss oil trader and the Kremlin oilman. Of course, because Rosneft is highly dependent on its traders.
Due to falling oil prices, the company is forced to increase supplies under pre-export financing contracts and, as a result, sometimes cancels regular sales tenders. If you violate the terms of pre-export financing, the trader can demand export proceeds from the company. Thus, almost all of Rosneft’s oil has already been contracted and paid for several years in advance, says one industry source. However, another interlocutor notes that “maybe, under a different leader, Rosneft would have gone bankrupt long ago, but it works.”
An interesting detail: in November 2015, Alfa Bank acquired a stake ($150 million) in the syndicated loan Ros-GIP and Ros-Vit, which is secured by oil supplies to Rosneft, from a syndicate member, Morgan Stanley Bank.
Did Friedman find a use for the money received for TNK-BP?
Immediately after the sale of TNK-BP, he said that he would invest in those sectors that interested him previously: fuel and energy complex, telecommunications, retail, banking sector. And all of Friedman’s further investment activities showed his interest exclusively in international projects. In June 2013, the investment corporation LetterOne Group, controlled by Alfa Group, announced the creation of L1 Energy to invest in the international oil and gas sector. Herman Khan was appointed chief executive officer of L1 Energy, and the advisory board included ex-head of BP Lord John Brown and head of AAR Stan Polovets.
Already in November 2013, the company announced its interest in the oil and gas assets of the German RWE - Dea company. Only a year and a half later, after struggling with British authorities who were unwilling to approve the deal, Friedman closed the deal to purchase the assets. At the same time, he had to sell shares in fields in the North Sea that are under the jurisdiction of Great Britain. The British government never approved Friedman's work on these projects. Dea, however, still has gas storage capacity in Germany, as well as projects in Norway, Denmark, Algeria, and Libya. In Egypt, after acquiring Dea, Friedman received a joint project with BP (in a ratio of 35% to 65%), but later L1 announced the sale of a stake in this project. Based on Dea, Friedman plans to develop an international oil business: in December 2015, Dea bought E.ON's assets on the Norwegian shelf for $1.6 billion, and also announced plans to operate in Mexico, South America, Iran and Brazil.
Dea L1 spent only a small part of the money received for TNK-BP on the purchase, since it attracted loans. L1 invested about $4.5 billion in the Pamplona funds of Alex Knaster, a former partner of Alfa Group, spent about a billion on the purchase of student dormitories in the UK, and $200 million on the purchase of Uber shares. The rest of the money is managed by a special treasury, the funds are placed on bank deposits and in risk-free securities, said a source close to Alfa.
Newspaper dispute
At the beginning of 2015, Friedman and Sechin, literally two weeks apart, published articles in the Financial Times and presented their vision of the oil market. Their positions were radically different: Sechin followed the concept of “peak production,” and Friedman followed the concept of “peak demand.” Friedman's thoughts on oil were published on January 28, and Sechin's on February 15, which made readers feel as if Sechin had decided to respond to Friedman's article. However, we found out that the Financial Times did not immediately publish Sechin’s article, although it was sent “much in advance” and was, in fact, initiated by the author himself.
Sechin explained the fall in world oil prices by the fact that pricing in the market came under the control of speculators and manipulators. He expressed confidence that the demand for oil in the world is still huge. According to Friedman, prices depend on the players’ perception of the market: previously everyone believed that the world’s oil reserves were insufficient, but now they are switching to new technologies and replacing oil with renewable energy sources. The businessman emphasized that he is “not a professional oilman” and his reasoning is based on the fact that “a person will always find a way to get around an obstacle in his path.”
Sechin promised a slight increase in prices by the end of the year, and a further recovery to $90–110 per barrel, because expensive oil production projects will be frozen during the period of low prices. Friedman is convinced that the world has entered a long period of low oil prices, which will increase the efficiency of companies and reduce the influence of lobbying in the oil sector. According to the businessman, countries with market economies and protected rights to private property are mainly interested in energy innovations. Sechin agrees with him on this: he writes that increased regulation in the market is unnecessary and only “worsens the situation.”
Sechin's perception of the global oil market may have been influenced by Daniel Yergin, author of the famous work Extraction: A World History of the Struggle for Oil, Money and Power. The book was published in Russia twice, the second edition in 2011 with the sponsorship of Rosneft. “For oil workers, the book will help reveal the main processes of the industry, its driving forces, and better predict the future,” Sechin wrote in the preface. However, Ergin's predictions did not come true.
The expert was skeptical about the “shale revolution”, considered oil a product of the future and expected a long period of high oil prices. This directly echoes Sechin’s article, where he writes that “the world needs oil.” As Kommersant wrote, Sechin read Ergin’s book in 2004 and “recounted the stories described in it with enthusiasm.” He then met the author and engaged him as a consultant for the government and Rosneft. “I think that Ergin, consciously or unconsciously, misled Sechin with his theory about peak production, and now we have what we have: Rosneft with debts against the backdrop of low prices,” says one of the interlocutors. A source in Rosneft does not agree with the complete coincidence of the views of Sechin and Ergin. “Ergin’s position is, of course, tailored to the United States and its interests in the oil market, while Sechin’s is tailored to Russia and its interests,” he notes.
Did Friedman foresee that oil prices would fall so much when he sold TNK-BP? Hardly. Several of his acquaintances say that he did not want to sell the company. But, as they say, the strongest are lucky.
Mikhail Fridman is a Russian entrepreneur, owner of the largest financial and industrial association in Russia, Alfa Group. Today, the businessman is one of the richest people in the country, consistently ranking in the top ten of the Forbes rankings.
Fridman Mikhail Maratovich was born on April 21, 1964 in the western Ukrainian city of Lvov, in the Jewish family of Marat Shlemovich and Evgenia Bentsionovna. Parents worked as engineers at a Soviet defense enterprise. For the development of navigation devices for military aircraft, Mikhail’s father became a laureate of the USSR State Prize. The future billionaire became the second child; an older brother was already growing up in the family. Now the elder Friedmans live in Germany, in the city of Cologne.
The businessman's school years passed like those of many Soviet children, but Mikhail among his peers was distinguished by his desire for education, giving preference to the exact sciences - mathematics, physics and chemistry. This allowed the young man to finish school with flying colors, after which Mikhail Maratovich set off to conquer Moscow, which he did not succeed the first time.
The future oligarch came to the capital with the aim of enrolling in a prestigious Soviet university - the Moscow Institute of Physics and Technology. But he failed the entrance exams, so he was forced to return home and choose another institute. Friedman chose MISiS, where the next year he was enrolled in the faculty of non-ferrous and rare earth metals.
As a third-year student, Friedman began to engage in entrepreneurial activities - he resold theater tickets and imported goods, and also became a mass entertainer within the walls of the university. Mikhail Maratovich organized a youth nightclub in the institute’s dormitory, on the site of which he organized discos and performances by pop stars for an appropriate fee.
In 1986, Mikhail Fridman graduated from high school and was sent to work at the Elektrostal metallurgical plant near Moscow, where the graduate was hired as an engineer in the design bureau. But working in his specialty was not part of the plans of the future billionaire, so Mikhail tried to find a way to open his own business, for which he needed to earn initial capital.
Business
Mikhail Fridman made his first big money by washing windows: the young man organized a student cleaning company, in which he allowed students to earn an increase in their scholarship. Simultaneously with the first company, the businessman opened the food delivery company “Courier” and the company “Alfa-Photo” for the sale of photographic materials and office equipment.
From this moment on, a significant stage began in the biography of Mikhail Fridman. Already in the late 80s, the young man founded the Alfa-Eco enterprise, which exports oil and metal products abroad. This company became the first building block of the oligarch's future empire called Alfa Group.
Already in the early 90s, the businessman’s sphere of activity extended to oil and gas refining, trade in food products and art objects, telecommunications services, insurance and investments, advanced technologies and the banking sector.
The largest branches of Friedman's Alfa Group were the first private bank in Russia, Alfa Bank, which today serves 14 million individuals and 200 thousand legal entities, the Altimo company, which controls the mobile operators Beeline, Kyivstar, and Life. and the Turkish operator Turkcell. Fridman’s group also owns the X5 corporation, which includes the supermarket chains Pyaterochka, Perekrestok, Karusel, Kopeyka and the A5 pharmacy chain.
In 2013, the oligarch founded the international investment group “LetterOne”, which works in the energy and technology areas. In February 2016, L1 made a major investment in the development of the Uber taxi service, which amounted to $200 million. The holding's assets also include the Norwegian branch of the German energy concern E.On.
In addition to business, Mikhail Fridman pays attention to charity. The businessman created and finances the Life Line charity foundation, which helps seriously ill children overcome fatal cardiac diseases.
In 2014, Alfa-Bank, with the personal participation of Mikhail Fridman, held the first international festival Alfa Future People in Nizhny Novgorod, dedicated to modern music and advanced technologies. The event quickly attracted many fans, and two years later the “open air” already welcomed 50,000 spectators.
Personal life
Mikhail Fridman's personal life was not as successful as his business career. While still a student, the businessman married fellow student Olga Aiziman, with whom he was married for about 20 years. The wife gave birth to two daughters to the billionaire - Larisa (born in 1993) and Ekaterina (born in 1996). But the children did not save the family from destruction, and in the early 2000s the couple divorced.
After breaking up, Olga and her children went to Paris, where she received a second education as a fashion designer. The billionaire retained the support of his first family and provides his daughters with a comfortable existence.
The second, this time, common-law wife of the oligarch was Oksana Ozhelskaya, a former employee of Alfa-Bank. In 2000, the girl gave the entrepreneur a son, and in 2006 she gave birth to a daughter, Nika. Friedman's second marriage also broke up.
The businessman settled in London, his lifestyle is called secluded and not public. Mikhail Fridman does not use social networks, including Instagram. Photos with the oligarch rarely make it into the press. It is known that, in addition to business, Friedman is interested in collecting samurai swords, driving fast SUVs, cinema, chess and music. In 2015, Mikhail Fridman undertook an extreme journey in a jeep through Iran.
To become part of the Jewish people, Friedman, in 2012, as part of a group of 12 businessmen, made a pilgrimage to Jerusalem. An entrepreneur invests in the development of the cultural identity of his own nation throughout the world. Friedman created the Genesis Philanthropy Group, which helps Russian-speaking Jews adapt to the national culture. One of the projects in this direction was support for the creation of the film “Russian Jews”.
Condition assessment
According to Forbes, Mikhail Fridman's fortune in 2016 was estimated at $13.3 billion, which allowed the entrepreneur to take a permanent second position in the list of the richest businessmen in Russia. In 2017, the businessman’s position in the ranking was shaken: with an amount of $14.4 billion, Mikhail Fridman moved to 7th position.
Mikhail Fridman now
In the fall of 2017, the Amsterdam Trade Bank branch of Alfa-Bank, located in Holland, was searched. The Dutch prosecutor's office has opened a criminal case into a number of financial crimes by the bank's management, which is accused of concealing illegal customer transactions. As part of the investigation, documents and correspondence from the management of the Amsterdam Trade Bank and the Central Bank of the Netherlands were seized from the organization’s archives. As part of this case, Peter Vacchi, the Dutch top manager of Mikhail Friedman, was arrested in Spain.
Mikhail Fridman may soon resign from the post of chairman of the board of directors of Alfa Bank, the Kommersant newspaper wrote on Tuesday.
Mikhail Maratovich Fridman is the chairman of the supervisory board of directors of the Alfa Group consortium, chairman of the boards of directors of TNK-BP and OJSC Alfa Bank. Fridman was born on April 21, 1964 in Lvov, Ukrainian SSR (now Ukraine) into a family of engineers. M. Friedman's father was awarded the USSR State Prize for the development of identification systems for military aviation. In the first half of 2000, the parents moved permanently to Cologne (Germany).
While studying at one of the schools in Lvov, he attended piano lessons and organized a vocal and instrumental ensemble. I graduated from school with one “B” (in Russian). After graduating from school, he made two unsuccessful attempts to enroll in the Moscow Institute of Physics and Technology (MIPT). In 1986 he graduated from the faculty of non-ferrous and rare earth metals of the Moscow Institute of Steel and Alloys (MISiS).
While studying at MISiS, Mikhail Fridman became one of the founders of the informal youth club "Strawberry Glade".
In 1986 - laboratory assistant at one of the institutes in Lvov.
In 1986-1988 ‑ design engineer at the Elektrostal plant (Elektrostal, Moscow region); During the same period, he began to engage in entrepreneurial activities. In 1988, he created the cooperative enterprise "Courier" specializing in window cleaning.
In 1989, he created and headed the Alfa-Photo company, which specialized in the sale of computers and copying equipment.
In 1990, Mikhail Fridman created and headed the Alfa Capital check fund.
Since 1991 - Chairman of the Board of Directors of the Commercial Innovation Bank Alfa-Bank (CIB Alfa-Bank).
In 1995-1998 served on the board of directors of CJSC Public Russian Television (CJSC ORT).
Since 1996 - Chairman of the Supervisory Board of Directors of the Alfa Group Consortium, member of the Board of Directors of OJSC Siberian-Far Eastern Oil Company (OJSC NK SIDANKO).
In 1998, after the merger of Alfa Bank and Alfa Capital, he became chairman of the board of directors of Alfa Bank.
He was a member of the Banking Council and the Entrepreneurship Council under the Government of the Russian Federation.
Since March 11, 2003 - Chairman of the Board of Directors of TNK-BP. Member of the boards of directors of VimpelCom and X5 Retail Group N.V.
For the 2003 deal between TNK and BP, Mikhail Fridman was named one of the most outstanding entrepreneurs of the year (international magazine BusinessWeek) and one of the 25 business leaders of the new Europe (Financial Times).
Member of the board of the Russian Union of Industrialists and Entrepreneurs (Employers) - RSPP(r), oversees issues of judicial reform.
In January 1996, he became the founder and vice-president of the Russian Jewish Congress (REC). Currently, he is a member of the Bureau of the Presidium of the RJC.