If you ever meet a magic genie
and are given the chance to switch
lives with one other person on the
planet, you probably won't regret
picking Mikhail Prokhorov.
Mikhail Prokhorov is a self-made,
48 year old, Russian billionaire
playboy who is perhaps most
famous in the western world for
being the new owner of the NBA's
Brooklyn Nets. Outside of the pro
sports, Mikhail has used his
massive bank account to build a
dream life that includes super
model girlfriends, mansions
around the world, two mega-
yachts, an ultra luxurious private
jet and even a semi-successful political
career.
He is essentially, the ultimate
billionaire playboy. And to think, none of it
would have been possible without the help
of a private jet full of prostitutes and a
debaucherous New Years party that landed
Prokhorov in a French jail back in 2007.
Wait…what??!!
Mikhail Prokhorov and Jay-Z
As of June 16th, 2013, Mikhail Prokhorov's
$13.5 billion net worth is enough to make
him the 9th richest person in Russia and
the 70th richest person in the world .
However, unlike most billionaires, the
majority of Mikhails' net worth is made up
of cash and other very liquid assets.
Prokhorov's business career dates back to to
1989 when he graduated from the Moscow
Finance Institute. He spent the next three
years rising to the top of a handful of
Russian banks, ultimately peaking as the
President of United Export-Import Bank
(also known as Onexim Bank). While
running Onexim Bank, Prokhorov was
introduced to his future business partner
Vladimir Potanin .
Vladimir Potanin had spent the previous 10
years working in the Soviet Union's
Ministry of Foreign trade where he
cultivated many close friendships within the
Kremlin and around Moscow. As
Communism fell apart, Potanin quickly gave
up his position at the Ministry of Foreign
Trade and became one of the first private
citizens to earn the right to open a private
bank. Together, with Potanin's government
connections and Prokhorov's experience in
finance, they were uniquely positioned to
make a huge fortune.
In 1995, the Russian government announced
that it was auctioning off one of their most
valuable state-owned assets, a mining
conglomerate called Norilsk Nickel. At the
time Norilsk Nickel produced 25% of the
world's nickel and was earning $400
million a year in revenues. Using a basic
10X revenue valuation method, the bare
minimum value of Norilsk Nickel should
have been $4 billion. Interestingly, the
auction's starting price was set at just $170
million. Even more interestingly, Mikhail
Prokhorov's own Onexim Bank was chosen
to administer the auction and collect bids.
The auction eventually received just two
bids. The highest bid was a $355 million
offer from a group called Rossiiski Kredit
Bank. The lowest bid was a $170.1 million
offer from the group controlled by
Prokhorov and Potanin. Amazingly, Onexim
Bank disqualified the higher bid right out of
the gate, claiming that Rossiiski Kredit
Bank's offer exceeded their credit. That left
Prokhorov and Potnanin as the lucky
winners of one of the most valuable state
owned Russian companies in the world with
a bid that was just $100,000 higher than the
reserve price.
Vladimir Potanin & Mikhail Prokhorov
Over the next 10 years, Norilsk Nickel
expanded at a furious pace. Under
Prokhorov's direction, the company sold off
all non-core assets, modernized equipment
and aggressively sought out new regions
with natural resources to exploit. Annual
revenues at Norilsk Nickel grew from $400
million in 1995 to over $10 billion in 2007.
Profits rose from $60 million per year to
over $1.5 billion.
When the company went
public, Mikhail and Vladimir instantly
became multi-billionaires. As the price of
commodities around the world sky rocketed,
so did the value of Norilsk Nickel thrusting
Mikhail and Vladimir into the upper
echelons of Russian wealth and power. So
why did Mikhail Prokhorov sell all of his
shares just as the company was surging?
That's where the private jet full of Russian
prostitutes comes in….
In January 2007, Mikhail Prokhorov and a
group of close friends hopped aboard his
private jet and flew to the upscale French
resort town of Courchevel, high up in the
Alps to celebrate the Russian Orthodox New
Year. Also on board that flight: Eight 20
year old sexy Russian prostitutes.
Technically the women were never proven
to be anything more than "models" who
were brought for "entertainment", but any
reasonable person would agree that this is a
very grey area.
After a debaucherous three day party that
has been described as a massive orgy , 50
French police officers swooped in and
arrested Mikhail and all of the "models".
The women were immediately released, but
Mikhail was held in a jail cell for four days
on charges that he was importing
prostitutes. He was eventually released and
all charges were dropped, but the incident
sent shock waves all across Russia. The
scandal was parodied on dozens of
television shows, commercials, magazines
and radio stations.
Private Jet Girl
With Norilsk Nickel's stock price at an all
time high, Vladimir Potanin saw the
scandal as the perfect opportunity to push
his old business partner out to pasture.
Over the next 12 months, both parties
fought bitterly over the future of Norilsk
Nickel. In the end, the pressure was just too
much for Prokhorov and he was forced to
liquidate 100% of his holdings in the
company. He ended up selling his stake to
Oleg Deripaska, who at the time the richest
person in Russia with a net worth of $28
billion. The final sale price for Mikhail's
stake was $7 billion in cash and $3 billion
worth of stock in one of Oleg's aluminum
mining companies.
As it turns out, the timing of his sale could
not have been any better. In October 2008,
just a few months after Mikhail cashed out,
the world economy collapsed. As stocks
plummeted, the global commodities market
was eviscerated. Oleg Deripaska's net worth
plunged 85% from $28 billion to an all time
low of $4 billion (it has since risen back up
to $9 billion). All of a sudden, Mikhail
Prokhorov found himself sitting alone atop
the list of the richest people in Russia and
within a few years, as the economy
recovered, his net worth grew to over $13.5
billion. Mikhail is no longer the richest
person in Russia, but he may be the
happiest! After all, if it weren't for a plane
full of high end Russian prostitutes, today
he probably wouldn't be sitting on a
mountain of cash as the owner of Brooklyn
Nets and Jay-Z's best friend.
