Mikhail Prokhorov built his $10.5 billion fortune in Russian commodities, but with the country’s economy in freefall, it’s his holding in the National Basketball Association’s Brooklyn Nets that’s proving his most secure investment.
The commodities tycoon who ran against Vladimir Putin for president two years ago bought the Nets and their unfinished arena the Barclays Center for $223 million in 2010. Those assets are now valued at as much as $2.7 billion, meaning Prokhorov’s share could amount to as much as $1.8 billion.
That should ease the pain of seeing his personal fortune shrink by $2.5 billion this year as investments in companies such as OAO Uralkali, the world’s largest potash producer, took a dive amid the rout in commodities and the ruble. Not all Russian fat cats have it so good. The country’s 20 richest people lost $10 billion this week, Bloomberg Billionaires Index data show.
“What’s better than owning an NBA team in New York, especially in a new arena in a hip place like Brooklyn,” said Sal Galatioto, founder of Galatioto Sports Partners, which represented Comcast-Spectacor in its sale of the NBA’s Philadelphia 76ers to Apollo Global co-founder Josh Harris. “Given the appreciation of NBA teams, it’s a fantastic investment that’s not correlated to the stock market.”
Billionaires Diversify
The majority of Russian billionaires diversified their business in the last decade, but most of them still hold their main assets in Russia, while some, such as aluminum magnate Oleg Deripaska, lost part of their international holdings during the financial turmoil of 2008.
Big foreign holdings offered a lifeline to many beleaguered billionaires this week. Alisher Usmanov was knocked from his perch as Russia’s richest person, mostly due to his Russian holdings. Even so, his losses were partly offset by gains in Chinese technology companies Alibaba Group Holding Ltd. and JD.Com Inc.
Usmanov, who owns about 30 percent of Arsenal Football Club in London, was overtaken by Viktor Vekselberg, 57, who holds Swiss machinery makers Sulzer AG and Oerlikon Corp AG in his portfolio. Their values declined less than his Russian assets, helping buoy his fortune, the index’s data show.
Brooklyn Home
Deripaska is the only Russian billionaire without large overseas assets whose fortune increased this year. He owns a 48 percent stake in United Co. Rusal, the world’s largest aluminum maker, which has gained from a stronger market and lower costs from the weaker ruble. His net worth rose about $856 million.