Prokhorov, Potanin to Split Interros Assets
Published: February 2, 2007 (Issue # 1242)
MOSCOW — Mikhail Prokhorov will resign as chief executive of Norilsk Nickel and divide his assets in holding company Interros with longtime business partner and Interros president Vladimir Potanin, Interros said Wednesday.
Prokhorov, who should pocket $7.5 billion from his Norilsk shares alone, said he intended to create an electricity holding that would be part of Interros.
Potanin will buy out Prokhorov’s blocking stake in Norilsk and other assets within Interros to ensure “a new level of freedom in carrying out executive decisions,” Interros said in a statement. The two billionaires founded Interros in 1990.
It was not clear who would replace Prokhorov at Norilsk, but Potanin would be the de facto head with a stake of around 55 percent. The statement said Potanin had been nominated to the company’s board of directors.
Norilsk shares barely reacted to the news, inching up 1.85 percent to close at $165.50 on the RTS.
Prokhorov said he “seriously” intended to apply himself to the business of traditional and alternative electricity production.
For his shares in Norilsk, Prokhorov will get at least $7.5 billion to help get his new venture started, said Vladimir Zhukov, metals and mining analyst at Alfa Bank.
Unified Energy Systems is putting stakes in 18 power-generating companies on the auction block over the next three years. Prokhorov would be able to invest in 14 of the so-called OGKs and TGKs, whose combined market value is around $42.5 billion, said Dmitry Terekhov, electricity analyst at Antanta Capital. This means Prokhorov would be able to snap up at least 18 percent of Russia’s generating capacity.
Alternative energy assets will also be high on Prokhorov’s shopping list, analysts said. A 35 percent stake in a U.S.-based producer of electric fuel cells, Plug Power Inc., will go to Prokhorov as part of the split, as will Smart Hydrogen, a joint alternative-energy venture between Norilsk and Interros.
Prokhorov said he believed “that hydrogen technologies will allow Russia to establish an innovative economy.”
As for Norilsk Nickel, Zhukov said it hardly mattered who would take the helm. “After Prokhorov, you can think of Norilsk as a train that has been put on rails. It doesn’t matter that much … who is running the train. … The company is set.”
Under Potanin, Norilsk is likely to start making acquisitions abroad, Zhukov said. Prokhorov presided over the consolidation of Norilsk’s gold assets into Polyus Gold, which was spun off in 2006. With a market capitalization of more than $9 billion, it is the largest gold producer in Russia and widely viewed to be Prokhorov’s greatest success in finance and management. Interros will maintain control of the company under Potanin.
Earlier this month, Prokhorov was at the center of an international scandal when French police detained him at a lavish alpine getaway during an investigation into a high-class prostitution ring. He was released after four days of questioning, and no charges were filed.
But Wednesday’s news left some wondering whether the affair had prompted Prokhorov’s split with Potanin. “The move is meant to distance that whole French issue from Interros, which is very concerned with protecting its image in the West,” said Terekhov of Antanta Capital.
But Sergei Donskoi, analyst at Troika Dialog, said the incident was “one factor among several, but not the main factor that led to the divorce.”