Russian billionaire Oleg Deripaska said on Friday the global financial crisis forced the divestment of his 20% stake in Canadian auto parts maker Magna to creditors that helped fund the $1.4 billion deal.
Deripaska’s interest in Magna, held through his Russian Machines company, was among his biggest overseas investments as the tycoon counted on its support for the modernization of Russia’s outdated car industry, now emerging as Europe’s largest market. Basic Element, Deripaska’s investment company, said in a statement it had decided to “terminate the participation of Russian Machines as a shareholder in Magna International due to the current global financial crisis”.
Basic Element said its cooperation with Magna to develop an auto components business in Russia would continue. Russian Machines controls the country’s second-largest car producer. Magna is run by Canadian tycoon Frank Stronach.
Basic Element’s statement did not disclose the creditors involved. At the time of the deal, reports said French bank BNP Paribas provided the bulk of the funds for the deal.
Deripaska, estimated by Forbes magazine to be Russia’s richest man, agreed to buy a fifth of Magna in September 2007. Deripaska, valued by Forbes at $28.6 billion, has repeatedly argued that the valuation of his empire is incorrect because it does not include heavy debts that Basic Element took on to amass assets from aluminium and oil to construction and food.
Russia is one of the fastest-growing car markets. Russian media have reported Magna plans to build a $500 million plant in Russia to assemble around 150,000 Chrysler vehicles a year. (Reuters)