How the co-owners of Evraz help science

Raw materials in Russia, high technology and exotic property abroad: that's their investment strategy.
"All of my competitive advantage is that I am well and correctly dig in the right places. That is, I buy a good field, no matter how much they cost, often because I buy yourself a competitive advantage, created by God. This is probably the most simple, the most vivid picture of how the strategy is built, "- said a few years ago, the chairman of the Board of Directors of Evraz Alexander Abramov about his understanding of the strategic vision of the participants in Executive Education programs" Skolkovo ". Global competitive advantages are not managers, and policy makers, companies, perhaps by nature, and management of digitized only profiting, explained to the audience the businessman, which is billionaire.

Abramov, as his business partner Alexander Frolov, made a fortune in the commodity sector. At the turn of 1990-2000-ies. They gained control of the three major steel mills - Kuznetsk, West Siberian and Nizhny Tagil. All that time were in a state of bankruptcy. On the basis of three business partners have built a vertically integrated holding company Evraz. In 2005 we conducted an IPO in London, and in 2006 sold half of its stake to Roman Abramovich and his partners, including Shvidler. As Abramov, who took 24th place in the Forbes ranking with a fortune of $ 3.6 billion, and Frolov (49th, $ 1.5 billion) investing? It is known that their relationship with Abramovich and Shvidler one transaction is not limited to: billionaires periodically discuss various investment ideas, confirmed sources close to the two businessmen. But with the media Abramov and Frolov personal investments do not discuss. Their investments can be judged by the actions of the company "Invest AG", established after the IPO Evraz for direct investments in Russian assets, these investments rather predictable and known: the primary sector (including the package "Norilsk Nickel"), the port, securities, finance , power generation, real estate development. More than 90% of the investments accounted for Abramov Russia, says his friend investment banker. But the remaining 10% abroad and invested in a less conservative assets, found "Vedomosti": exotic development projects and high-tech companies.

foreign plan

Abramov and Frolov thought about creating a private equity fund in foreign assets two years after the IPO. Their investment advisor then became Managing Director of Credit Suisse Jeremy Fletcher - known expert in metallurgy and mining sector. He participated in many major industry transactions, for example in 2006 advised Mittal Steel on Arcelor takeover. Evraz Group Fletcher helped to absorb the South African Highveld Steel & Vanadium and American Oregon Steel.

In March 2008, Fletcher was appointed managing director of the institution in London Kew Capital Company. His partners are the six top managers of Credit Suisse. Kew Capital became the exclusive investment advisor registered in the British Virgin Islands company Whiteclif Enterprises, which through a chain of family office control Abramov (66.7%) and Frolov (33.3%). Itself controlled by Kew Capital Redrock Group from the British Virgin Islands, the beneficiaries of which are Abramov and Frolov. A business owned Redrock Group and Evraz shares - and also in the ratio of 2: 1: Abramov controls 22.4% Metallurgy, Frolov - 11.2%.

From these statements, "Vedomosti" Companies have found that structures Abramov and Frolov have foreign assets of almost $ 1 billion. This is mainly high-tech companies and exotic property. Among the latter - the project of a luxury resort on an island of the archipelago of Turks and Caicos Islands in the Western Caribbean worth $ 400 million, the construction of the most expensive apartment complex in the Czech Republic - The Oaks 220 exclusive villas near Prague for € 400 million. Structure Abramova also has invested in the most expensive mansion on the coast of New Zealand, is estimated at $ 50 million - with extensive pastures, marina and luxury villas by local standards.

It seems that these exotic investment ideas were lowered managing family office from the top, ie. E. From a shareholder, such as, perhaps, the island and the ranch on the coast of liked him when he sailed past on his famous boat "777", says the manager of one of the family office. Exotic projects designed for a fairly narrow audience and will pay off for decades, he said. Journalists and experts have suggested that the co-owner of Evraz acquired the farm structure in New Zealand and the uninhabited island for yourself and your friends - "another toy billionaire." It's not as familiar objects Abramov, is a purely commercial projects. Businessmen buy them because they were sold cheap, and expect them to make good money. "Abramov is not a man, that money lying idle," - said the source "Vedomosti". Indeed, a ranch in New Zealand this autumn start taking wealthy tourists. Projects in the Czech Republic and the Caribbean, despite the apparent exoticism, well calculated - the same resort on the island can be seen as a conservative investment and the ability to bring a stable income, objected Director of Key Accounts Department of elite real estate consulting firm Knight Frank Elena Yurgeneva.

Close in spirit investment

Abramov is very close to the theme of science, he was forced to leave, to go into business in the late 1980s, says a former classmate of a businessman at Moscow Institute of Physics and Technology (MIPT). Abramov recent years supports Fiztech, from which he graduated in 1982 with honors. In 2013, he became one of the founders of the non-commercial partnership "Fiztech-Union", created to support graduates MIPT modernization projects. Abramov financed the construction of an overpass over the railway to the entrance to the university, and also made a significant contribution to the endowment, the size of which now stands at 200 million rubles, said CEO Endowment Fund Dmitry Zaitsev MIPT. The billionaire, although among the founders of the fund, the management of money is not directly related, means manages a special company within the approved investment declaration of the founders, Zaitsev said. According to him, the Fund invests conservatively and not invested in venture projects. These fund revenues accrue to the MIPT, which directs them, in particular, to finance its own technopark. That is, this project is absolutely non-profit. The endowment should not be viewed as a means in any way to ensure the functioning of the university, make it private, it's just a demonstration of what the graduates are something. For example, to develop the material base of MIPT, Abrams explained in his speech to the participants of "Fiztech-union."

But profits businessman and his partner Frolov can bring tens of millions of dollars invested in foreign high-tech companies. At least, partners packages in these companies are already hundreds of millions.

Nanoparticles pain

In 2010, Abramov and Frolov structure together with the fund Phoenix IP Ventures-III by Kew Capital became shareholders in Philadelphia based pharmaceutical company Iroko Pharmaceuticals Inc. The company, founded three years earlier by the former specialist in venture investments GlaxoSmithKline Osadzhi Imasogi, develops innovative drugs against acute pain. Investors received 95.4 and 4.6% respectively. The amount of investments not disclosed, but, according to experts, investing not up to $ 100 million.

Iroko Pharmaceuticals is named after the West African iroko wood, whose deep roots symbolize strength and stability, and foliage - updating and innovation, narrates the company's website. In recent years Iroko develop drugs based on proprietary technologies SoluMatrix facilitating acute pain with a lower dose NSAID, and applying, for example, in osteoarthritis. According to the US Ministry of Health, it is high doses of non-steroidal anti-inflammatory drugs cause serious side effects in patients up to thrombosis and stroke. The Iroko preparations containing nanoparticles of active substances which are 20 times smaller than its original size, but nevertheless, due to the faster dissolution of the body, they provide increased exposure area and correspondingly more rapid and lasting effect, the materials Iroko Pharmaceuticals.

In the summer of 2013 the company was going to hold an IPO on NASDAQ, for which was estimated at $ 145 million. But after the registration of the prospectus has decided not to place the action. In a press release CEO of Iroko Pharmaceuticals Vavrika John he explained that, "in spite of the substantial interest from investors," the company will be able to implement plans to release new products with the support of existing shareholders. Based on estimates for the IPO package Abramov and Frolov's cost at that time $ 138 million. The financial statements of the company did not disclose in the next few years.

Call Without Borders

In 2013, Abramovich made his biggest nefutbolnoy investment in the UK - and the first in the telecommunications sector. Billionaire by Minden company has acquired for 70 million pounds ($ 110.8 million), 23% of the international mobile operator Truphone. In the deal, he decided on the advice of Abramov, who along with Frolov through the family office network was at that time the largest shareholder of the company, told the then representative of Abramovich. Perhaps the co-owners of Evraz shares Truphone got quite inexpensive: In 2011, the company filed for bankruptcy. But, apparently, he was not given the progress: instead the operator, in 2012 announced a new shareholder - the company Vollin Abramov and Frolov.

 Truphone makes it possible to combine in one sim-card several telephone numbers assigned to different countries, and any of them can make calls, go online and send sms at local rates, even if the call is international. After the deal with Abramovich, partly decorated as the additional share issue, the share of Abramov and Frolov declined from 80 to 58%. A small package of shares of the operator - 3% - bought and Shvidler. Based on their Truphone investment was estimated then at $ 400 million, and the package Abramov and Frolov -. About $ 250 million According to company statements, the distribution of shares among shareholders and remains so. Truphone now works in 66 countries.

Investments in the projection

It seems very "close in spirit to" high-tech investment Abramov made in February 2011. Then their joint fund with Frolov became a shareholder of the young British company Compound Photonics Group, founded by a group of scientists dedicated to the commercialization and laser technologies. The company, whose divisions are based in the United Kingdom and the United States, working on a small device, providing a high quality image playback.

Abramov was always interested in this topic, it suffices to recall that he was the candidate of physical and mathematical sciences, protected them in 1985 PhD thesis was entitled "The excitation laser light waves and electromagnetic waves breakdown," recalls one of the familiar businessman. In 2014, a long-time partner and joined Abramovich: Minden his company acquired 41.6% in Compound Photonics Group. And the owners of Evraz fund by the time the package was 52%. Compound Photonics Group in the report for 2014 reveals only that was worth $ 132 million, and Abramovich's latest investment round, sold 31.4% stake for $ 80 million, which gives an estimate of the company at $ 254 million turns out package Abramov and Frolov - $ 106 million. . at the end of 2014 the Group increased its revenue more than 3-fold, from $ 4.2 million to $ 14.6 million, however, and its loss has increased 2-fold, to nearly $ 51.3 million, but this is due to the acquisition of production facilities in. Britain and the United States, follows from the report Compound Photonics. Financial results for the following periods of "Vedomosti" not found. The cost of these companies formed the basis of assessment of the prospects of technology owned by them, and little affected by the current financial indicators, explains one of the investment consultants.

Photonics - one of the most current trends in virtual reality technologies, so that Compound Photonics should become a full-fledged business, says managing director of Runa Capital Sergey Belousov, who together with Abramov is a board "Fiztech-union." Most likely, Abramov has investments in high-tech companies in Russia, just judging by its investment strategy, involving substantial investment - $ 10 million to $ 100 million in high-tech companies in the development stage - in Russia it is difficult to find a suitable project, says Belousov. Here most of the high-tech companies are attracted from investors is much smaller amount - about $ 1-5 million, he recalls. In Russia, the very limited range of high-tech businesses to invest in the later stages of development, although the number of start-ups early stages (at least in the field of IT), our country does not lag behind Germany and France, agrees managing partner of the fund's investments in high-tech start-ups early stages of Runa Capital Dmitry Chikhachev (he is also a member of the board "Fiztech-Union"). The sooner to invest in high-tech project, the more the investor must be understood in the technology, he added. But the fact that the high-tech companies in Russia are growing slowly, it depends on the business environment, says another friend Abramov.