On April 13, as his Brooklyn Nets were wrapping up a dismal season with a defeat at the hands of second-stringers from the Toronto Raptors -- their 61st loss in 82 games -- owner Mikhail Prokhorov left his box before the final buzzer sounded. That may have been the high point of his evening.
Hours later, the Russian billionaire got word from staff in Moscow that masked agents of the Federal Security Service had raided the offices of his headquarters and other companies -- an apparent sign of dissatisfaction at the highest levels.
Early the next morning, Prokhorov boarded his private jet for the nine-hour flight to Moscow.
Within weeks, top editors were gone from RBC, his media company, which had angered the Kremlin with investigative reports on the business interests of close relatives and friends of President Vladimir Putin. But the damage was done. Soon after, Prokhorov sold his main Russian holding, a $2 billion stake in a fertilizer company. The biggest of what remains, a $900 million holding in aluminum giant Rusal, is now on the block.
If that sale goes through, his most valuable investments would no longer be in Russia but in and around his adopted home, Brooklyn. In addition to the Nets and the Barclays Center arena, Prokhorov holds leases on several other entertainment venues there. The Bloomberg Billionaires Index estimates their value at $2.2 billion, while Prokhorov’s staff puts the figure at about $3 billion, according to two people close to the company. His remaining Russian assets -- some of which, like the Rusal stake, are likely to be sold -- are worth $2.3 billion, according to Bloomberg data. Another estimated $5.7 billion is in cash, those data show.
Prokhorov’s shift highlights the difficulty even the most experienced and powerful businessmen face in staying on the right side of the ever-changing line that the Kremlin defines as loyalty. Some billionaires, like Roman Abramovich and Mikhail Fridman, years ago pulled substantial holdings to Europe or the U.S., where the rules of the game are more predictable. Others, like oil tycoon Mikhail Khodorkovsky, have faced criminal charges in Russia and been forced to cede their assets to the state.
Such risks are a big reason why local businesses remain reluctant to commit capital even as President Vladimir Putin exhorts tycoons to invest to help revive the economy.
Uncertainty Rising
“Prokhorov has always stayed within the boundaries” and has benefited from his close ties to the authorities, said Gleb Pavlovsky, a former Kremlin adviser who now heads a political consultancy in Moscow. “But uncertainty is rising and that’s not Prokhorov’s element.”
Prokhorov declined to be interviewed for this article. Dmitry Razumov, the chief executive officer of his Onexim holding company, said in e-mailed comments the sales have long been in the works and that some proceeds will be invested in its Russian finance and energy businesses. “We have no plans to sell off all our Russian assets,” he said. “Quite the opposite is true.”