Journey from St. Petersburg to Moscow

Did Senator Andrey Molchanov's position and acquaintance with politicians help him to build the business of LSR Group?
Origin source
In the courtyard of the mansion of LSR on Tverskoy Boulevard is retrocars of interwoven metal bars - one of the works of contemporary sculptor Wim Delvoye, which cost about € 1 million with an old car is connected and much more weighty investment LSR -. In the spring of 2014 construction company bought the largest city ZILom site for up to 28 billion rubles, which for seven years, plans to invest 120 billion rubles in the construction of 1.5 million square meters. m.

A lot of work. The main owner of the LSR 43-year-old Andrey Molchanov (№117 in the Forbes ranking, the state $ 800 million) two years ago left the seat the senator from May of 2015 he became CEO. He comes to work at nine in the morning, and requires the same from the staff. Why businessman aspiring to politics, has now made a bet on the square footage?

Circle of friends

Unlike other business, senators Andrey Molchanov became interested in politics early on. Back in 1994, 22 years of silence ran for members of the St. Petersburg Legislative Assembly from the party Yegor Gaidar's "Russia's Choice". "I won the firstth round, - says the businessman. - But then at me a bucket of mud poured "Opponents accused Molchanov that he is a foreign agent and his finances Mafia!. The second round Molchanov lost Alexander Prokhorenko, who later made a career in the Smolny and was vice-governor.

And the silence after the first failure of the political left in the business: his company is "Revival of St. Petersburg" was engaged in the reconstruction and restoration of old buildings, which are many in St. Petersburg. First facilities were single-piece, but gradually the business grew.

In the 1990s, the company bought up the enterprise for the production of concrete, brick, sand career. "A situation that enterprises building industry could buy, and buy a relatively inexpensive", - he said in an interview with Forbes Igor Levit, who headed the company at the time. By 2007, the LSR controlled 67% of the brick market, 50% of the market of reinforced concrete products, 69% of the market sand quarry in St. Petersburg. In addition, the built-third of total input of luxury housing and by a wide margin from the competition was the largest construction company in the region.
Molchanov actively participated in the political life of the region. Natives of LSR worked in Smolny were deputies of the legislative assembly of the city and the region. One of the units LSR headed in those years Sergei Mironov, the future leader of the political party "Fair Russia" and the speaker of the upper house of parliament. "I moved it to the deputies," - says Molchanov.

With people involved in affairs of state, he was familiar from a young age. Andrey Molchanov - stepson Yuri Molchanov, holding that "Business Link" in the 1990s was already evident at the St. Petersburg construction market. Molchanov Sr. studied at the Physics Department of Leningrad State University, along with the principal owner of the bank "Russia" Yury Kovalchuk (№132, the state $ 650 million) and the head of the Central Election Commission Vladimir Churov, and together with the future president of Russia Vladimir Putin at one time in charge of international relations in the home university (Molchanov He was vice-rector on this issue, Putin - rector's assistant).

In 2003, Valentina Matvienko, won the elections the head of St. Petersburg, Yuri Molchanov invited for the post of vice-governor on investments totoruyu he held for 10 years. Four years later, the proceeds belonged to his stepson of "Lenstroyrekonstruktsiya" (later LSR Group) has grown eight-fold from 4.3 billion to 36 billion rubles LSR went public. Today it is one of Russia's largest engineering firms with a turnover of about 100 billion rubles.

Andrey Molchanov vehemently refutes the version that love helped his business success. "Nothing has done more damage to my business than the relationship with Yuri Molchanov, - said a businessman on his stepfather very emotional. - Yuri Molchanov was my mother's second husband and married her when I was 10 years old. I have after school on her insistence, changed his name. He divorced her long before that time, he became an officer. At age 19, I began an independent life. We have good relations with him, we are not in conflict, but nothing of the joint we had not, it would be there all may think! "

Now Yuri Molchanov works in VTB, which is responsible for infrastructure projects in St. Petersburg. Judging by the St. Petersburg Registration Chamber, in 1990 the company "Business Link" Molchanov Sr. were notthat joint projects with firms Andrei Molchanov, but the documented trace of the later close cooperation could not be found between stepfather and stepson Forbes.


In 2005, Molchanov decided to move to the capital. Two years later, unexpectedly for many he became assistant head of the Health and Social Development Mikhail Zurabov. "They asked me: if you want to help the motherland? - Said Molchanov, do not hesitate grandiloquent language. - I said that I wanted. It seemed to me that in politics can bring more benefit the country. " According to him, he not personally invited Zurabov, and mutual acquaintances. But friendly relations with the former minister, now ambassador to Ukraine, still preserved (for comment for this article Zurabov failed).

As an assistant to the billionaire had to oversee the construction of the new modular medical centers that gather like designer - pre-engineered, once with medical equipment. Health Ministry program involves the construction of 15 such centers, Molchanov's detractors said that he hopes to find usedof its production of construction enterprises. However, the Ministry stepson Petersburg vice-governor worked only half a year: in September 2007 Zurabov resigned along with Mikhail Fradkov's government.

Why Molchanov did not remain in the government? "I was there no one called," - he explains succinctly. During a career politician stopped, but in the business year was fruitful: in November LSR held an IPO on the London Stock Exchange for $ 772 million Investors valued the company at $ 6.8 billion, including the capitalization of the companies-builders was greater only in PIC.. Molchanov claims that the LSR was ready for an IPO in 2005, but he waited for the right moment. "I, at that time" sleeping "shareholder, was much more profitable to own a public company, - he explains. - It is more difficult to steal something. "

After retiring from the ministry Molchanov still saw himself as a politician rather than a businessman. He had great ambition, he was aiming at the seat of the deputy of the State Duma, or even the Speaker of the Federation Council, told Forbes one of Molchanov competition in St. Petersburg. "He's a young guy, he was tiredto be a billionaire, I wanted to become a statesman ", - adds the source. In January 2008, Molchanov was approved by the senator from the Leningrad region. "I've had several companies in the region and have developed good relations with the governor Valery Serdyukov, - explains the businessman. - He called me and said, well go-ka you in the Senate. After thinking for a day, I agreed. " The statement of his candidacy did not take more than 15 minutes in the legislature. Molchanov promised to lobby the interests of companies in the region.

By his own admission, a businessman dedicated work in the Federation Council of 100% of their time dealing with the affairs of the company "on the weekends." Molchanov really developed in the Senate frantic activity: attending meetings to develop and introduce bills, quickly became the deputy chairman of the committee on economic policy. In 2010, he headed the Committee for CIS Affairs and conducted numerous protocol meetings with the heads of state administration, often accompanied President Dmitry Medvedev, for example, went with him to Hong Kong for a meeting with the Chief Minister gonkongsCoy Administration Donald Tsang. "Molchanov - bright, talented guy - describes his colleague on the committee, Vadim Moszkowicz. - With the duties he handled. "

But the relationship with long-time friend, the speaker of the upper house Sergei Mironov in his new place did not exist. "We stopped talking even before his departure from the post of the speaker of the Federation Council, - says Molchanov. - A man has chosen his path and, in my understanding, many people failed. But I do not want to judge him. " Mironov refused to talk about Molchanov.

Moscow was not built in a day

The first projects in the capital appeared at LSR in 2001, but after moving to Moscow business Molchanov developed slowly. The company bought the factory of reinforced concrete products, has built several concrete plants, however, participate in real estate development and the race to earn on the price rally for a long time did not work. "Due to the boom in property investment owners of rights to land is often set too high prices, leaving too low margins for developers", - he explained his LSR is not too high-profile successes in the 2008 report.
As a result, two of the first object, a house on the street Davydkovskaya (42 000 sq. M) and suburban residential complex "Grunwald" (23 500 sq. M), LSR built jointly with the Federal Security Service. "FSO was the builder, we - the investor and gave them about 30% of the apartments", - explained the Forbes top-manager of the Moscow division of LSR. Why to FSO? "It's just a coincidence," - she says.

In 2008, LSR still bought on the market two sites: a site in the center of the construction of business center of class A "New Baltschug" and 1.8 hectares on the Leningrad highway under a large apartment complex. However, none of these independent projects have not yet been built. Why leading companies in the St. Petersburg market, behaved passively in Moscow? Maybe it's the lack of administrative resources? Andrey Molchanov insists that the success in St. Petersburg to the stepfather and his acquaintances have no relationship.

Conservative policy of LSR in buying land in Moscow paid off when the crisis broke out in 2008 year. For example, Sergei Polonsky, the owner of Mirax Group, before Molchanov moved from St. Petersburg to MoskWu had developed in the capital of frantic activity - buying site with borrowed money or money partners. Net debt LSR Group by the end of 2008 amounted to 33.6 billion rubles on revenue of almost 50 billion rubles. The company then Polonsky looked steeper: revenue was in 2008 amounted to 46.4 billion rubles, the debt - 21.7 billion rubles, net profit - 17.3 billion rubles.

But in 2009, at Mirax in the construction stage was seven objects on the input of which still had 34.7 billion rubles. Sales have risen, banks have stopped giving loans and the funds received from the sale of apartments, to Mirax Mirax started up the construction of new facilities. Objects were unfinished, the former co-investors have joined the ranks of creditors.
And LSR portfolio about 80% occupied apartments mass segment that were sold during the crisis. In addition, in 2009, we were able to negotiate with banks on restructuring of loans - as a result of unfinished and defrauded investors LSR was not. But there was a possibility to get state support - in the company, which included dozens of factories, quarries, and other production units, employs 17 500 people. Mirax Group, which pOila expensive offices and apartments, did not get state aid. To support developers, the State has been to allocate funds to build housing for the military, waiting. In 2009, LSR Group has signed contracts with five of the Ministry of Defence and the Government of St. Petersburg for the sum of 21 billion rubles. Until 2011, revenues remained at pre-crisis level.

whether membership in the Federation Council helped? "How could I, as a senator, to help your company? - Outraged silence. - Amendments to the laws of the host? It is a myth that the senator status helps to negotiate with the banks, we have some senators repossessions arrested. I did not call anywhere and did not ask us to be included in the list of strategic enterprises, it happened automatically, because we are the largest and most efficient company. " Support from the federal and regional budgets actually received while many major builders including competitors Molchanov - the group "PIC" Kirill Pisarev and Yuri Zhukov and "SU-155" Michael Balakina.
In 2009, the Moscow-based company "Morton" has won a contract for the constructioTVO housing for military Balashikha cost 17 billion rubles (in charge of the construction Colonel later got 7 years on charges of accepting a bribe in especially large sizes). In the same year, "Morton" was invited to the LSR project, so that she has built 140,000 square meters. m, the value of the contract amounted to 3.9 billion rubles.

Why is the owner of "Morton" Alexander Brooks decided to share with Molchanov? "Contractors on building Balashikha were then almost all the major house building factories in Russia, including LSR - reported" Morton "in the press-service. - There was no special relationship between us. " A source in the company said that "Morton" in fact obliged to download due to its mega-project the wrong house building factories. However, a year later, "Morton" and LSR launched a joint project without the participation of the state: the company Molchanov had to build 114 low-rise buildings on the land, "Morton".

"The government has put us a choice - says Molchanov of the times - or selling to zero, or not survive at all. I decided to continue to build, and we are sellingIs practically at cost. Defense Ministry then thanks to including us, decided a lot of their problems with the waiting list. " Cost per square meter on the contract with the "Morton" to the Ministry of Defense was 27 800 rubles. For comparison, the cost per square meter in St. Petersburg, a major market for LSR, according to the company, then was about 70 000 rubles.

St. Sergius

In spring 2011, five Russians created a charity, "Foundation for the Preservation of St. Sergius of Radonezh, the spiritual heritage." One of them was Bishop Tikhon of Podolsk, former head of the unified customer service of the Moscow Patriarchate (Alexander Zaitsev in the world). The second - the general director of ITAR-TASS Vitaly Ignatenko. And three - businessmen from the Forbes list: Andrei Molchanov, Vasily Anisimov (№43, the state $ 2 billion) and Arkady Rotenberg (№60, $ 1,4 billion). The Foundation started preparing for the celebration of the 700th anniversary of St. Sergius of Radonezh in 2014. At its funds to erect a monument to the famous Russian priest in Astana, Minsk, Simferopol and the Kulikovo field and made a film & laquo; Sergius of Radonezh ", financed the restoration of the Trinity-Sergius Lavra. "My participation in the fund - a deeply personal matter related to my beliefs, charities, faith," - says Molchanov.

Chairman of the board of trustees was the State Duma Speaker Sergei Naryshkin. The council except founders entered the presidential envoy in the Central Federal District Alexander Beglov, head of the FSO Yevgeny Moores, Ambassador to Ukraine Mikhail Zurabov, chairman of "Gazprom" Board of Directors Viktor Zubkov, St. Petersburg Governor Georgy Poltavchenko, and other influential people. Some of them Molchanov mentioned in an interview with Forbes. With Ignatenko he befriends families with Zurabov friendly, Viktor Zubkov to be treated with great respect, called him a unique person, a tough, strong leader and says that he addresses him by his first name. With Vasily Anisimov they are neighbors in Italy - at Molchanov there are two houses with a total area of ​​900 square meters. m and half a hectare of land.

In the same year, LSR has broken new ground in the capital market. According to IFRS for 2011, the share of projects in Moscow Portfle companies increased from 8% to 21%, their cost close to 26 billion rubles. Where did the large-scale projects? Vasily Anisimov LSR invited to participate in the integrated development of the Greater Domodedovo. First LSR received for construction 335 000 square meters. m, then the project has been increased by almost half, to 605 000 sq. m. In addition, Molchanov was able for the first time after the joint construction projects with the FSO to do business-class housing in Moscow. LSR has become a co-investor in construction of the former steel plant at the Serpukhov shaft, 16 km from the Kremlin, which "Coalco" Anisimov could not start for almost 10 years. Residential complex "Don Olympus" is the only object of LSR in the capital is in the active phase of construction.

Why Anisimov chose partners Molchanov played and whether there any role in the partnership fund Sergius of Radonezh? Questions sent to the receiving Anisimova, remained unanswered. One of the top managers' Coalco "reported that the LSR chosen because it has implemented many development projects in St. Petersburg, on the stock exchange attracted $ 1 billion and has its own production facilities.

In the same in 2011 and he moved Molchanov career in the Senate. The Federation Council headed by Valentina Matvienko, Molchanov and five other senators publicly demanded the reform of its structure. As a result, the number of committees was reduced from 27 to 10, the owner of the LSR Group headed the committee on economic policy.

Manual control

Molchanov sincerely indignant when he is suspected of lobbying for the interests of his company. "Actually, I spend time [to work in SF], without me, the company is working worse" - he says. But it does not hide the fact that political career, until recently, he was interested. Businessman is one of three candidates who were considered for the role of governor of the Leningrad region. When asked, if he is not offered a position Molchanov replies: "I think it would have been able to take this position." However, the law was passed in 2013 that prohibits senators own property abroad. Molchanov, which there is, and bills, and real estate, decided to prematurely leave the post of senator. "Leaving was not so easy - he recalls. - I do not wanttpuskat ". Molchanov became Chairman of the Board of Directors of LSR Group. But as the deteriorating economic situation, more and more drawn into operational management. In May, he was appointed general director.

First of all the owner got rid of foreign currency debt. For this it was necessary to sell the favorite child - a modern cement plant in Slantsy, Leningrad Region. Under his construction company once and nazanimala currency - the financing of this project does not collapse even in the crisis of 2008, all Molchanov invested in the project about € 450 million, the money allocated Vnesheconombank, RBS (ABN Amro) and HSBC. The plant is fully covers the needs of the group in the cement: it is designed to produce 1.86 million tons, LSR consumes about 1 million per year.

According to Molchanov, Filaret Galchev (owner of the largest on the market of "Eurocement Group», №23, $ 4,4 billion) from its construction discouraged. "He said: why do you not build - says Molchanov. - But then cement cost $ 200 per ton, and I was confident that the company will pay off. Now cement cost $ 50 per ton, and the entire industry belongs to five players around the world. Galchev etc.edlozhil sell him, I sold. " The deal amounted to 18 billion rubles. The press service of "Eurocement Group" reported that the company is fully satisfied with the technical condition of the plant and the LSR plant remains one of the largest customers. Do Molchanov Satisfied? "Not really - he admits - but it's a fair price in today's market."

"The sale of the cement plant LSR Group has helped to get rid of foreign currency debt," - says the analyst "VTB Capital" Nikolai Kovalyov. By the end of 2014 LSR accounts accumulated 25 billion rubles, net debt does not exceed 0,1 EBITDA (in 2008 the company met with the ratio of debt to EBITDA 2,6). The accumulated funds will go to Moscow projects. In 2014, LSR took the unprecedented step. Despite the stagnation in the economy, the conflict in Ukraine and Western sanctions, the company in the spring bought at the auction of the Moscow government ZIL 65 hectares, where you can build more than 1.56 million square meters. meters of real estate. For more trading platform "Kortros" Viktor Vekselberg (№4, $ 14,2 bn) but LSR paid 28 billion rubles - 4.6 billion rubles more than the starting price. As inWord of the agreement the money is paid in installments over seven years. According to Molchanov, an object in the company studied no more than two months.

According to the Russian State Register in the I half of 2015 about 9,500 new apartments were sold in Moscow - twice less than in the same period last year. Falling demand and LSR felt: in the half-year revenue decreased by 11%, sales of new apartments - 14%. How in these circumstances, the purchase of the site looks ZIL, total investment in which seven years will exceed 120 billion rubles? "This is a very good deal and a landmark project for me, - says Molchanov. - In Moscow, we now have several large projects, I want to increase sales here at least to St. Petersburg. "

The owner of a large construction company, does not participate in the competition, of Forbes confirmed, that the ZIL project, even in the current environment is as cost-effective. Nikolai Kovalev said that the ruble prices for new buildings in Moscow did not fall, and in the worst case, the project may stall for a few years.
Molchanov still leads the life of a billionaire: in native Petererburg flying from Moscow on his plane (the road takes three hours), is building a new boat, summer spends a lot of time at his house in Italy, in spring and autumn - in the United Arab Emirates. She loves to read, all other authors prefer to Dostoevsky, but it looks to the future with optimism. "The borders are not closed, it's pugalki - said Molchanov, whose son is studying in New York to be an economist. - Sanctions will be removed. Globalized world, it is an objective process. Just now we are suffering because of the stupidity and ambition of Western politicians. " Forever Is he retired from politics?