Profiles of Movers & Shakers

Alisher Burkhanovich Usmanov was born on 9th, September, 1953 at Churst in the Namangan province of Uzbekistan, and, according to the Sunday Times Rich List 2012, published in April, was Britain’s second richest man, with £12,314 million, closely beaten to the number one spot by Lakshmi Mittal and family, with £12.7 million.

Alisher Usmanov

However, that was back in April, and observers of these matters now believe that Usmanov is considerably richer than Mittal, following the recent flotation of Facebook in which he has a significant holding.

The oligarch, whose company, Digital Sky Technologies, has invested in several Silicon Valley start-ups and sold $1.4 billion worth of Facebook stock during the company’s recent IPO is now estimated to be worth in the region on of £15 billion. According to Forbes Magazine, he is generally acknowledged to be Russia’s Richest man, and in the last Forbes list was the 28th richest person in the world, but his Facebook windfall should have projected him into the World’s Top Ten richest people.

This astonishing fortune had humble beginnings, more than twenty-five years ago, when Usmanov identified a huge market in Russia for plastic bags, like supermarket shopping bags, which were so rare in Russia at that time that people would wash, and re-use them! So, Usmanov invested in the machinery to make plastic bags, and quickly cornered the market in Russia. He still has a yellow bag sporting a butterfly with the Soviet and American flags on each wing to mark the 1988 visit of former President Ronald Reagan with Mikhail Gorbachev.

Since then, he has been built his empire on the traditional commodities and activities including  metals and mining and investment, and he is the majority shareholder in Metalloinvest.  But, he has also invested in the media, and ‘new age’ technologies including the internet, mobile telephones and the social media, including Facebook. He is a co-owner of the media holding company which comprises 7TV and Muz-TV federal television channels and 33 regional TV broadcasting stations.

In addition Usmanov personally owns the Kommersant, and Sekret Firmy Publishing Houses; and a share in the company SUP which controls Internet websites Livejurnal.com and internet newspapers Gazeta.ru

He is also the owner of Russia’s second biggest mobile telephone company MegaFon, and Russian investment fund, ‘Digital Sky Technologies’ (DST) which owns stakes in popular web portals like Mail.ru Odknoklassni.ru, Vkontakte.ru and a significant chunk of Facebook shares.

Usmanov married Irina Viner, a top rhythmic gymnastics coach, in 1992.  In 1997, he attended the Academy of Finance to study banking.  Usmanov is the president of the FIE, the international governing body of fencing and he has since invested in fencing programs and fencing development around the globe.
In business, Mr. Usmanov has demonstrated a keen ability to take advantage of the opportunities that appear in a financial disaster, and is currently reaping the rewards of an ambitious bet on Facebook made amid the global economic recession in 2009.

As other investors were demanding tough terms, he and his Russian business associates were willing to buy almost 10 percent of the company while giving up the voting rights on those shares to Facebook’ founder and chief executive, Mark Zuckerberg.  Now the investment, of less than $900 million, made through two entities, Mail.ru and Digital Sky Technologies, could be worth more than $6 billion.  It is a little-known fact that Mark Zuckerberg turned to the Russian investors in 2009 at a meeting quietly brokered by Goldman Sachs.
Other sources of financing had slowed because of the economic crisis, and because of the popularity of online social games in Russia, investors there had a keen sense of the value of social networking sites and were willing to pay more than others for a stake in Facebook.  The Russians were also willing to accept another condition important to Mr. Zuckerberg.  Despite owning 10 percent of Facebook, they would get no voting rights or seat on the board. They would also have no say in the site’s policies on privacy or political organizing — preserving independence that has become especially important as Facebook has played a major role in domestic politics in Russia.

This year, Russia’s second-largest cell phone company, MegaFon, which Mr. Usmanov partly owns, is expected to issue shares in London in its own I.P.O. which will again increase his wealth considerably.

Usmanov is perhaps best-known in Britain, as a major shareholder in Arsenal Football Club, following in the footsteps of fellow Russians Roman Abramovich, owner of rival Chelsea, and Alexandre Gaydamak, former owner of Portsmouth.

Business Interests

Usmanov owns diverse interests including stakes in  iron ore, steel, and media companies, including the social media.
Usmanov is the co-owner of Metalloinvest which he founded along with business partner Vasiliy Anisimov to manage his acquisitions in the metal industry.  However in 2012 Mr. Anisimov sold his stake in Metalloinvest.  Metalloinvest owns a wide range of Russian metal and mining businesses including Mikhalovsky GOK, Moldavia Metal, Ural Steel,  the Oskol electro-metallurgical plants and the Lebedinski mining-processing combines.  His combined holdings make him one of the top 10 steelmakers in Russia, and he is chairman of Gazprominvestholdings, the investment holding subsidiary of Russia’s state-owned gas company Gazprom, where his role is to manage what Gazprom calls its “most difficult and sensitive financial transactions’.

Usmanov is the sole owner of Cyprus-registered Gallagher Holdings, described as a global conglomerate with main investments in mining and steel industry, technology and media.

He is also the largest shareholder in London-listed Nautilus Minerals, which is prospecting undersea gold and copper deposits off Papua New Guinea.

However, it was in August 2006, that Usmanov began to invest in the media. It has been suggested that it was at the instigation of his friend Vladimir Putin, he bought Kommersant, a newspaper formerly owned by Russian oligarch Boris Berezovsky who has fallen into disfavour with the Kremlin and is living in exile.  The deal was finalised at US$200 million.
On 12 December 2011, following the 2011 Russian protests regarding vote-rigging in parliamentary elections, Kommersant Vlast magazine ran an unflattering issue on Vladimir Putin titled “Victory of United ballot-stuffers” – a pun on Putin’s United Russia party.
It is a measure of the importance of Putin’s goodwill towards Usmanov, that he sacked the editor, Maxim Kovalsky, and the head of the publisher’s holding company, Andrei Galiyev saying that there had been an “ethical breach” and that the issue “bordered on petty hooliganism”.
Usmanov made a US$25 million purchase of a 50% stake in Russian sports TV channel 7TV in November 2006 and bought 75% of Russian TV music channel MUZ-TV for US$300 million in June 2007.

Arsenal Football Club
Usmanov moved into the football arena in August 2007 by acquiring a 14.58% stake in the English team Arsenal Football Club. He and his business partner Farhad Moshiri bought the stake in the club owned by former Arsenal vice-chairman David Dein for £75 million.
On 28 February 2008, Usmanov’s investment vehicle, Red and White holdings, confirmed that it was the club’s largest shareholder and the company said Red and White ‘has the necessary funding to increase its stake further [but] it has no current intention to make a full takeover bid for Arsenal for six months’.  If the stake were to reach 30%, Red and White Holdings would have to launch a formal takeover. Usmanov said he had been an Arsenal fan for seven years and he had a great love for Arsenal.  His company, Red and White holding announced on 20 June 2011 that it had more than 29% stake in Arsenal holdings plc. This was further increased after Usmanov purchased shares held by Scottish football club, Rangers in February 2012

Patron of the Arts
However, his interests extend beyond football and fencing, to the Arts, and on 17 September 2007, Usmanov paid more than £20 million, and some reports say up to £60 million, for an art collection owned by the late Russian cellist Mstislav Rostropovich, just days before it was to be auctioned by Sotheby’s in London.  He is reputed to have given all the artwork to the Russian state, where it is housed in the Konstantinovsky Palace near St Petersburg.
In November, 2008, a stunning collection of 112 Turner oils and watercolours was transported from Tate Britain to Moscow, at an estimated cost of £5 million, for an exhibition, paid for by Usmanov, which it was hoped this might improve the still frosty relations between the UK and Russia at that time.  Martin Davidson, chief executive at that time, of the British Council, said: “This exhibition provides an opportunity not simply to see the outstanding art but also to use it as a means of developing a whole set of new understandings between the UK and Russia.  Cultural relations for us are a vital way of supporting the bonds between two countries, never more so when there are other differences.”
The exhibition was paid for by Usmanov’s art and sports foundation which also funded a Whistler exhibition in Moscow two years earlier.  Usmanov, who is a trustee of the Pushkin museum, said: “When they asked me to support this exhibition I didn’t have a choice,” Tate Britain director Stephen Deuchar said it was an exciting day. “This is a project we have been debating, pursuing, arranging for quite a time now.”
The Tate and the Pushkin already have strong ties, although there are no plans for a reciprocal show.  Earlier this year the Royal Academy staged the successful ‘From Russia’ Exhibition, in which works such as Matisse’s ‘The Dancers’ were lent by Russia’s principal collections.  In total the Tate lent 40 oil paintings and 72 works on paper for the first Turner exhibition in Moscow since 1975.  It included his masterpiece Norham Castle, Sunrise (1845); Venice scene The Dogano, San Giorgio (1842, pictured); and many people’s favourite, the epic Snow Storm: Hannibal and His Army Crossing the Alps (1812)

Other interests
And what does Alisher Usmanov do with all his wealth, apart from investing in football clubs?  Well, in late September 2007, Usmanov purchased the rights to a large collection of Soviet cartoons, which for 15 years had been owned by Russian-born actor Oleg Vidov, who emigrated to the United States in 1985.  After the deal, valued at $5–10 million, Usmanov donated the cartoon collection to a newly formed Russian children’s television channel.
Apart from his charitable donations, and his generous ‘gifts’ of entire art collections to the Russian state, he has, in the last few years taken delivery of a brand new 110 metre (367’) mega-yacht called DILBAR, named after his Mother, at an estimated cost of £110 million, so it would appear that the ‘going rate’ for building a mega-yacht is £1milion a metre.
Dilbar

 

With space for 20 guests and 47 highly qualified crew, she is a floating palace, and in July and August Usmanov and his yacht are to be found at Puerto Cervo on the Costa Smeralda, where he has a heavily-guarded summer holiday compound, whilst spending most of the rest of the year commuting between Monte Carlo, London and Moscow, whilst Dilbar winters at Antibes.
He is currently enjoying his newly delivered, personal 737, and has reportedly just bought a wide-body Airbus A340 that is the largest private jet in Russia, and possibly in all of Europe. It could cost as much as $500 million, depending on how he outfits it, but on previous experience, no expense will be spared.
He also owns Sutton Place, near Guildford in Surrey, which is a Grade I listed Tudor manor house built c.1525 by Sir Richard Weston(d.1541), courtier of Henry VIII. It is of great importance to art history in showing some of the earliest traces of Italianate renaissance design elements in English architecture.  In modern times the estate has had a series of super-rich owners, a trend started by J. Paul Getty, then the world’s richest private citizen, who chose to spend the last 17 years of his life there.
However, Usmanov has hardly visited Sutton Place, in the last few years, preferring the other house he owns in Hampstead, Beechwood, a Grade II listed mansion for which he paid £50 million in 2008.  There is currently an application filed with Town Hall planning officials for permission to build a Roman-style bathing complex in the garden.  Mr. Usmanov wants to create a garden villa to house a new pool, sauna, gym and changing rooms. Inside, no expense will be spared with the interior of the oligarch’s new pool room modelled on the leisure facilities enjoyed by Roman emperors.  An octagonal entrance lobby leads the swimmer through to a balcony which boasts a view across the 25-metre pool.  Whether it will be built now depends on what view Camden Council’s planners take.

Conservationists believe if permission is granted the new building could set a dangerous precedent, as the estate next to Hampstead Heath is on land currently designated as Metropolitan Open Land, the urban equivalent of green belt.  The Highgate Society’s planning spokesman Michael Hammerson said: “We are due to meet to discuss the proposals in detail next week. However, there are clear rules regarding developments on Metropolitan Open Land and these must be strictly adhered to.

Whilst this battle rages, Usmanov has many more important things to deal with, but he has a habit of getting what he wants, and whilst people have mixed feelings about Alisher Usmanov, nobody can deny his ability to sniff-out a good deal, and act decisively, as with his Facebook investment, and he is fearless in the pursuit of the objects of his desire.

Mickey Mouse Goes to Russia

Since I first wrote the above article about Mr Usmanov, I have become aware of yet another important deal he did in November last year 2011, when he sold a 49% stake in 7TV a Russian television network, to Walt Disney.

Walt Disney Co., the world’s biggest theme-park operator and owner of the ESPN sports network, paid $300 million for a stake in a Russian broadcaster UTH Russia, owned by billionaire Alisher Usmanov and his partner Ivan Tavrin.

Disney will jointly operate the broadcast network with Moscow-based UTH and intends to promote its theme parks to a Russian audience, Chief Executive Officer Bob Iger said in a telephone interview from Moscow in October 2011.  The Disney Channel already reaches about 5 million of the country’s 50 million TV households through cable and satellite operators. “This is very much a distribution play for us,” Iger said at the time. “This is a large market that already enjoys Disney entertainment.”

“We expect the family channel combining the best Disney programming with original Russian TV shows will be of great interest to the audience,” Mr. Usmanov said in a statement.

This deal now gives Mr.Usmanov an important stake in what could become a major leisure business in Russia. Watch this space!

Robert Jarman, 6th, October,2012

 

 

 
Monday, August 6th, 2012