Mikhail Prokhorov

Mikhail Dmitrievich Prokhorov (; born 3 May 1965) is a Russian-Israeli oligarch and politician. He was also an owner of the Brooklyn Nets.

After the collapse of the Soviet Union, Prokhorov obtained Russian state-owned metals assets at prices far below market value in Russia's controversial loans-for-shares privatization program. His company, Norilsk Nickel, became the world's largest producer of nickel and palladium. He is the former chairman of Polyus Gold, Russia's largest gold producer, and the former President of Onexim Group. As of December 1, 2021, '' Bloomberg Billionaires Index'' estimates his wealth at US$14.0 billion and has named him the 148th richest person in the world, while '' Forbes Magazine'' lists his wealth at US$11.5 billion and the 193rd richest person in the world.

In 2011, Prokhorov ran as an independent candidate in the 2012 Russian presidential election. He was third in voting, amassing 7.98 percent of the total vote. In June 2012, he declared the establishment of the new Russian political party called Civic Platform.

In April 2022, Prokhorov immigrated to Israel and received Israeli citizenship under the Law of Return.

Early life

Prokhorov was born in Moscow to Tamara and Dmitri Prokhorov. On his paternal side, his grandparents were Russians, relatively wealthy peasant farmers (known as kulaks) who were persecuted as class enemies under the Bolsheviks and again under Stalin. His father, one of eight children, grew up poor, after his family "lost everything and was forced to flee from one part of Siberia and restart life in another". He has one sibling, an elder sister, Irina. On his maternal side his grandfather was Russian, and his grandmother Anna Belkina, was a Jewish microbiologist who remained in Moscow during World War II to make vaccines while her daughter Tamara was moved east to safety.

Dmitri Prokhorov was trained as a lawyer and handled international relations for the Soviet Committee of Physical Culture and Sport. Tamara Prokhorova was a materials engineer at the Institute for Chemical Machine-Building.Ioffe, Julia
"The Master and Mikhail: Are Putin and Prokhorov running for President against or with each other?"
27 February 2012; retrieved 12 March 2012.
As part of his job, Dmitri Prokhorov had the opportunity to travel abroad. His wife worked as an engineer for a research group at the institute specializing in plastics. They died within a year of each other, both from heart disease when they were in their late 50s. Mikhail Prokhorov's sister, Irina, who "runs his philanthropic organizations, an erudite literary magazine, and a publishing house ... lives in a wing of his mansion west of Moscow".

In 1989, he graduated from the Moscow Finance Institute. From 1989 to 1992, he worked in a management position at the International Bank for Economic Cooperation. Thereafter, he shortly served as head of management board of the MFK bank (International Finance Company, ) and then in 1993 the newly formed United Export-Import Bank () (Uneximbank; akas: Onexim Bank; Oneksimbank), with Alexander Khloponin, a friend from college, and Vladimir Potanin, to whom he was introduced by Khloponin and who became his business partner. Oneksimbank is the financial twin of MFK and was also known as the ONEKSIMbank-MFK banking group which was also close to Andrey Vavilov.

Business career

In 1992, at the age of 27, Prokhorov partnered with Potanin to run Interros, a holding company that they used in 1995 to effect the purchase of Norilsk Nickel, one of Russia's largest nickel and palladium mining and smelting companies. During the largely un-regulated privatization of former state-controlled industries after the collapse of the USSR, Prokhorov and Potanin (the latter by then a deputy prime minister who oversaw privatization) were able acquire the shares from the workers of Norilsk Nickel for a fraction of their estimated market value and seize ownership of the company. When he departed in 2007, Prokhorov's share of the company was worth US$7.5 billion.

Prokhorov's first major financial success came at MFK, which became a depository institution for the government. The bank acquired Soviet assets in the amount of US$300 to US$400 million. Prokhorov held the post of chairman of the board from 1992 until 1993. In 1993, Prokhorov became the chairman of the board for Potanin's Onexim Bank, which, in 1993, became the paying agent for Finance Ministry bonds and a servicing bank for the City of Moscow's external economic activities. In May 1994, Onexim Bank focused on large clients in foreign economic activity especially in the sectors of oil and gas, chemical and metallurgical industries. In 1994, Onexim became the depository and paying agent for Russian Treasury obligations, and in 1995, it became the authorized bank for the federal agency dealing with bankrupt enterprises.

Banks holding government funds earned handsome fees and paid minimal interest at a time when inflation was in the triple digits.

In the 1990s, the Russian government needed loans to operate. Prokhorov partnered with Potanin. Their Onexim bank ran auctions for the government, in which bidders won the right to loan the Russian government money. Onexim and its affiliates were the winning bidders at the Norilsk Nickel and other auctions they conducted. The Russian government secured the loans with blocks of shares of the newly privatized state enterprises. The government never repaid the loans, and, as a result, Onexim received ownership of the collateral, which was the shares in the privatized enterprises.

When cash privatization eventually replaced the failing voucher privatization phase, the government came up with a scheme to leverage the privatization process and quickly raise money for its cash-strapped operations. Under the "loans for shares" program, the administration sold off majority stakes in some of its prized companies in the energy, telecommunications, and metallurgical sectors in exchange for loans taken from the new private sector banks owned by rich businessmen. According to the terms of the loan, the lender could stake equity ownership in the company if the government failed to repay the loans by September 1996. Auctions conducted under the "loans for shares" program were executed in such a way that only the few businessmen who owned these banks were allowed to partake in auctions. Following these bogus auctions, the majority stakes in some of the biggest Russian companies were acquired by a small number of major banks at abysmally low prices. These businessmen also bankrolled Yeltsin's 1996 presidential election victory, exerting their influence over the then president.

Onexim purchased Sidanko, which was a part of the Novolipetsk metallurgical industrial complex, and also the Novorossiisk marine shipping company and a large share of the Northwest marine shipping company.

In April 1996, Prokhorov was appointed to the Board of Directors of Norilsk Nickel (which then still belonged to the state). In November 1995, Onexim Bank won 38% of Norilsk Nickel in a loans-for-shares auction for US$170.1 million, US$100,000 (or less than 1%) higher than the bid starting price. At the time, Norilsk produced 25% of the world's nickel output.

Onexim managed the Norilsk Nickel auction, with a reservation price of US$170 million. It arranged three bids from affiliates, all at US$170 or US$170.1 million. Rossiiski Kredit Bank offered US$355 million, more than twice the starting amount. However, Onexim disqualified Rossiiski Kredit's bid on the basis that the bid amount exceeded Rossiiski Kredit's charter capital (the nominal value of its outstanding shares). The auction rules required Onexim to provide any objections in advance of the auction, to give bidders time to cure them. None of the submitted bids even closely approximated the market value of Norilsk Nickel, which had annual profits of around US$400 million., p. 15; further reference to Ira W. Lieberman & Rogi Veimetra, "The Rush for State Shares in the 'Klondyke' of Wild East Capitalism: The Loans-for-Shares Transactions in Russia", ''George Washington Journal of International Law & Economics'' 29: 737-768 (1996).

''60 Minutes'', the American news program, interviewed Prokhorov. The program alleged that:

"Kremlin leaders gave him what amounts to an insiders opportunity to buy one of the state's most valuable assets. It was acquired from the Kremlin in a so-called auction for the measly sum of a few hundred million dollars in a process that even Prokhorov's business partner admits wasn't perfect, and probably not even legal under Western standards. But it was legal in Russia".

During the interview, Russian business correspondent Yulia Latynina stated about the auction of Norilsk Nickel, "Yes, it was rigged. But, it cannot be explained in normal economic terms to an outsider, especially an American. You had robber barons, we have oligarchs."

In December 2011, Prokhorov capped a year of higher-profile political activity in Russia with the December declaration that he would run as an independent in the 2012 presidential elections. He took third place in these elections with 7.98% of the vote. In June 2012, he declared the establishment of a new political party called the “ Party of Civic Platform”. He resigned his positions as Chairman of Polyus Gold and President of the ONEXIM Group to enter politics in June 2011.

In August 2017, Prokhorov agreed to sell 7% of Rusal to fellow billionaire Viktor Vekselberg for $503.9 million. Talks between the two had stalled earlier in the year with Prokhorov selling 3.3% via an accelerated bookbinding.

In October 2017, Prokhorov and Viktor Vekselberg sold 3% of Rusal for $315 million in an accelerated bookbuilding. The sale of Prokhorov's 0,7% reduced his stake in the company to 6%.

Norilsk Nickel

After selling off most of Norilsk's non-mining assets, Prokhorov moved to modernize a highly complex mining operation which required icebreakers to transport metal over the frozen Arctic region. Prokhorov invested in an innovative Finnish freighter that did not require icebreakers. Norilsk Nickel is headquartered in Moscow. Environmental and labor conditions are harsh, and pollution remains a problem; Prokhorov has invested heavily in pollution control. However, despite these efforts, the mining areas continue to suffer from a high level of pollution. He converted Norilsk's gold-mining interests into the US$8.5 billion corporation Polyus Gold, Russia's largest gold producer. In 2003, he oversaw the acquisition of Stillwater Mining, his first international venture. He resigned as Norilsk CEO in February 2007 and declared his intention to separate his assets from those of long-time partner Vladimir Potanin. The two engaged in protracted negotiations to separate the conglomerate Interros, which the duo co-owned since the 1990s, into separate holdings.

ONEXIM Group

In May 2007, following the decision to exit Interros, Prokhorov launched the private investment fund ONEXIM Group, with assets valued at US$17 billion at the time. As the separation from Interros proceeded, and as other industries caught Prokhorov's attention, the group rapidly changed its investment profile. In April 2008, Prokhorov sold his 25% plus two shares stake in Norilsk Nickel to United Company RUSAL, another mining conglomerate controlled by his fellow billionaire Oleg Deripaska, in exchange for some 14% of Rusal stock, about US$5 billion in cash, and additional payment obligations of US$2 billion. The deal has been singled out as a major success for Prokhorov as only three months later, following a dip in oil prices, a disastrous stock market crash halved the value of most Russian companies, including Norilsk. He emerged as one of the very few businessmen to have cashed out in time. However, his wealth has also been affected, as the value of his remaining interests in various companies (including Rusal and Open Investments) declined sharply, and as the remaining payment from Rusal had to be postponed but has since been fully paid.

In September 2008, ONEXIM Group acquired 50% of Renaissance Capital, a major Russian investment bank which has reportedly encountered liquidity problems. ONEXIM purchased a small bank, renaming it IFC (for the bank which Prokhorov had run in the early 1990s). One of ONEXIM Group's divisions focuses on the development of nanotechnology investing in high-technology projects such as white LEDs. One of the key areas of development is the production of materials with ultra–tiny structures used in energy generation and medicine. As part of that focus, ONEXIM purchased Optogan in 2008.

In June 2007, the Russian Prime Minister, Mikhail Fradkov, announced the formation of the Government Council for Nanotechnology, to oversee the development of nanotechnology in the country. Prokhorov was one of 15 individuals appointed to the council, which was to be chaired by then-First Deputy Prime Minister Sergei Ivanov.

In July 2009, the shareholders of RBC Information Systems agreed with Prokhorov's ONEXIM Group to sell an additional 51% stake for US$80 million, half of which went to pay off debts. The deal was closed in 2010. Prokhorov has business interests in mining and metallurgy (Polyus Gold, Intergeo, stake in Rusal), financial services (IFC-Bank, Soglassye insurance company, half of Renaissance Capital), utilities (stake in Quadra), nanotech, media (JV!) and real estate development (Open Investments).

In 2016, Onexim sold its 20% stake in Uralkrali, and is considering selling off assets including United Co. Rusal, Opin PJSC and Quadra.

In January 2022, ONEXIM Group sold 82.47% of the energy company to a subsidiary of Rosatom State Corporation.

International investments and patronage

Prokhorov owns a number of international investments. In Israel, he owns two private hospitals, where he has paid for the medical treatment of friends such as Alla Pugacheva.

In March 2004, Prokhorov founded the Cultural Initiatives Foundation (as part of the Mikhail Prokhorov Foundation). It is headed by Prokhorov's elder sister, Irina, a prominent Russian publisher. At one time, he financially supported CSKA Moscow's basketball, hockey and football clubs, and is a member of the Supreme Council of the Sport Russia organization. He serves as president of the Russian Biathlon Union. He is also an avid freeride/freestyle jet skier. He performs tricks on a jet ski in a professional stand-up achievement. In the ''60 Minutes'' interview he stated that a backflip is his most impressive trick.

In September 2009, he made an offer to buy a controlling interest in the New Jersey Nets of the National Basketball Association and half of a project to build a new arena in Brooklyn. On 11 May 2010, the NBA approved the sale of the Nets to Prokhorov, making him the majority owner of the team with an 80% stake. He also acquired a 45% interest in the new Barclays Center sports and entertainment arena.

He became the first non-North American team owner in the NBA. In December 2011, after announcing his run for the Russian presidency, the NBA confirmed that Prokhorov's ownership interest would not need to be altered in the event of his election ( Herb Kohl, a then sitting but since retired U.S. Senator, owned the Milwaukee Bucks at the time). On 30 April 2012, the Nets officially made the move to Brooklyn, rebranding themselves as the Brooklyn Nets.

In October 2017, reports continued to circulate that Prokhorov was moving closer to closing the sale of 49 percent of the Brooklyn Nets. On 27 October, ESPN reported that Prokhorov had agreed to sell the 49 percent to Taiwanese-Canadian businessman Joseph Tsai, co-founder and executive vice chairman of Alibaba. The stake was valued at $1.2 billion. On 18 September 2019, Prokhorov sold the remaining 51 percent of the Nets to Tsai. According to Dmitry Razumov, CEO of Onexim, Prokhorov's investment was less than $1.5 billion, and the overall sale was estimated at $3.5 billion, with an income of about $2 billion.

Prokhorov controls, and is one of the largest investors in, Sensorium Corp, a virtual reality company.

Controversies

At a Christmas party for the Russian nouveau riche at the French Alpine resort of Courchevel in January 2007, he was arrested on suspicion of arranging prostitutes for his guests. After three days, he was released without charge. In September 2009, Prokhorov was officially cleared from this charge and the court case was dismissed. According to the French prosecutor, he had paid all expenses for the single women to travel to France, but they were not professional prostitutes or working for a prostitution agency.

Prokhorov made headlines in early March 2010 when he was forced to forfeit a £36 million deposit he had placed on the £360 million Villa Leopolda in the French Riviera in 2008. Under French property law, once an initial sale contract has been signed, a deposit can be refunded only during a seven-day cooling-off period. On 2 March 2010, a court at Nice

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