Russian billionaire Oleg Deripaska has sold his 9.99% stake in German construction giant Hochtief, his company said on Thursday, as the credit crunch batters Russia’s richest man.
The sale marks the second major blow this month to Deripaska, who already handed a $1.4 billion stake in Canadian auto parts maker Magna to creditors as his indebted empire struggles to find money amid the liquidity squeeze.
Hochtief shares closed on €24.20 on Thursday, valuing Deripaska’s stake at around €170 million ($233.3 million), a discount of nearly 70% to the price he paid in May of last year. As stock prices around the world have tumbled dramatically in recent weeks, margin calls have led to forced selling of assets at steep discounts.
Deripaska, valued by Forbes at $28.6 billion, has repeatedly argued that this valuation of his empire is incorrect because it does not include the large debts assumed by Basic Element as it amassed assets from aluminium and oil to construction and food. His spending spree on foreign assets has in recent years helped promote the image of Russia as a resurgent economy. In the course of a decade, Russia has gone from depending on foreign loans to giving them out, and its businessmen became powerful forces in the world of mergers and acquisitions.
Analysts have warned that the ebbing of global liquidity and plummeting stock values could mean that Russia’s oil-driven streak of expansion is drawing to an end, as its industrialists are forced to focus on keeping their core assets intact.
A spokesman for Basic Element, Deripaska’s main investment vehicle, said the firm was still committed to its large minority stakes in the world’s largest aluminium producer Norilsk Nickel and Austrian construction firm Strabag. In a terse statement, Basic Element, which was valued at $45 billion at the end of 2007, said the Hochtief stake has been sold. “Joint venture infrastructure projects in Russia will proceed as planned,” the statement said.
In a separate press release, Germany’s Commerzbank said in had increased its stake in Hochtief to 11.53% as of Oct. 6. A Hochtief spokeswoman said Commerzbank and Allianz were the investors. “The shares are in a safe pair of hands,” she said. A spokeswoman for Commerzbank said the purchase of Hochtief shares was an “industrial investment,” which the bank would gradually reduce in the longer term.
The world’s largest aluminium producer -- United Company RusAl, which Deripaska majority owns -- is alone estimated to be $14 billion in debt after it borrowed $4.5 billion from Western banks to fund the purchase of a one-quarter stake in Norilsk Nickel. After divesting his Magna stake, Deripaska became the first of Russia’s multi-billionaires to publicly acknowledge the effect of the global financial crisis.
That investment was jeopardized when the stake pledged as collateral to lenders fell in value, giving lenders the right to demand either more shares as collateral or a cash commitment and raising fears that other businesses could suffer the same fate.
Russia’s fifth-richest man, Mikhail Prokhorov, this week told his former business partner Vladimir Potanin he would pull out of an asset split deal, citing force majeure. (Reuters)