Mikhail Prokhorov is a Russian businessman and politician who is best known for starting Russia’s largest private commercial bank, “Onexim,” and for owning the NBA team “Brooklyn Nets.” Even before he went to Moscow Financial Institute, Prokhorov had an entrepreneurial spirit and showed signs of being an entrepreneur. As a college student, he did odd jobs like making and selling acid-washed jeans. He said that he made a lot more money than a highly qualified engineer. After he graduated, he got a job as a management trainee at the International Bank for Economic Cooperation. After a few years, he and Vladimir Potanin, who was the first deputy prime minister of Russia when Boris Yeltsin was in power, started the Onexim Bank. His bank gave the cash-strapped Russian government loans in exchange for shares in public companies that owned Russia’s natural resources. People say that Mikhail Prokhorov privatized the Russian nickel and palladium mining and smelting company Norilsk Nickel and turned it into the largest nickel and palladium producer in the world. Later, he sold his shares in Norilsk for over $5 billion in cash and a controlling stake in Rusal, the biggest aluminum producer in the world. When he ran against Vladimir Putin as an independent candidate for president of Russia in 2012, he got a lot of attention from the public and the media.
Early years and childhood
Mikhail Prokhorov was born to Dmitri and Tamara Prokhorov in Moscow on May 3, 1965. Dmitri Prokhorov was a lawyer who was in charge of the “Soviet Committee of Physical Culture and Sport.” Mikhail’s mother, Tamara, worked at the Institute for Chemical Materials as a materials engineer. Irina is Mikhail’s older sister.
Even though Dmitri Prokhorov was born into a wealthy kulak family, he grew up poor because his parents were persecuted as class enemies by the Bolsheviks and then again by Stalin.
Mikhail Prokhorov lost both of his parents when he was young. They both died of heart disease in their late 50s.
He was very driven to work hard and make a name for himself. This was something his family had taught him. In his early years, he also became very interested in sports. When he was in his teens, he joined the Soviet Youth organization Komsomol.l.
In 1983, when he was 18, he was forced to join the army. For two years, he was in the elite missile corps. After that, he joined the Communist Party of the Soviet Union. While he was going to Moscow Financial Institute, Mikhail lived with his sister and her daughter in their apartment.
Mikhail graduated from college in 1989 and got a job as a manager at the International Bank for Economic Cooperation, where he worked for three years. After that, he led the boards of the international financing company MFK Bank and the United Export-Import Bank, also known as “Onexim Bank.”
Alexander Khloponin, a friend from college, and Vladimir Potanin, a former deputy prime minister whom Prokhorov met through Khloponin, both worked on the boards of directors for MFK and Onexim banks. In 1993, he worked with Potanin to start the Onexim Bank.
A professional life that broke new ground
In the long run, Mikhail Prokhorov’s friendship with Vladimir Potanin turned out to be very important, as their business partnerships helped them both become billionaires.
In 1992, he and Vladimir Potanin worked together to create “Interros,” a holding company that they turned into a conglomerate with interests in several infrastructure sectors.
Mikhail Prokhorov and Vladimir Potanin later bought stock in MFK Bank together, and Prokhorov became the board chairman. They used Interros, which is an investment trust, to buy a 25% stake in Norilsk Nickel, which is one of the largest companies in the world that mines and extracts palladium and nickel.
After the USSR broke up on December 26, 1991, there was a rush to privatize everything, which let Potanin and Prokhorov buy a big piece of Norilsk Nickel for almost nothing. Since they owned a large number of Norilsk shares, they were effectively the owners of the mining company.
When he was the Chairman of the Board at the MFK Bank (International Finance Company) from 1992 to 1993, he had his first taste of money. The bank became a place for the government to store money and bought Soviet assets worth between $300 million and $400 million.
In 1993, he became Potanin’s Onexim Bank’s Chairman of the Board. The bank became the paying agent for bonds issued by the Ministry of Finance and a servicing bank for the City of Moscow’s economic activities with other countries.
Together with Potanin, he got loans and treasury bonds for the Soviet government and took care of bankrupt companies, which made it easy for them to end up with billions. During Russia’s scandalous privatization period in the 1990s, when Onexim was the government’s “blue-eyed boy,” he was able to do whatever he wanted.
Onexim was like a giant walking across the world of finance in Russia, which was still feeling the effects of the fall of the USSR. The newly formed government needed loans badly, so Onexim held auctions where the highest bidder(s) would get the right to loan money.
The loans given to the government would be backed by shares in companies that used to be run by the government but are now privately owned. Most of the time, the government didn’t pay the mortgages. This allowed Onexim bank to take ownership of the collateral and, in a way, take control of the private company.
Onexim took over Norilsk Nickel by running the auction in an unethical way, which is kind of like what we call “insider trading” today. Still, the bank took full control of Norilsk in 1997 when the government couldn’t pay back the loan through a rigged bidding process.
Buying Norilsk Nickel and bringing the giant mining and smelting company up to date
After Onexim Bank took over Norilsk Nickel’s management, Mikhail Prokhorov streamlined the mining company’s operations by selling its non-mining purchases. He wanted to reorganize and make sense of the mining giant’s very complicated operations and make the business profitable, which he did in the end.
As part of his plan to reorganize, he laid-off workers and set up incentive programs based on performance to improve the overall efficiency of operations. He also did some brave things to stop pollution. Norilsk was putting out more sulfur dioxide than all the factories in France put together, so he put a lot of money into pollution control technology.
Prokhorov turned Norilsk Nickel into a business that made money, and he used most of those profits—a whopping US$8.5 million—to start Polyus Gold, which is now Russia’s biggest gold producer and a spinoff from Norilsk. In 2007, he quit as CEO of Norilsk because he wanted to buy a company that makes and sells electricity.
Many people thought that Potanin ended his partnership with Mikhail in Interros, the holding company for Norilsk because Mikhail had arranged for prostitutes to serve wealthy guests in a French alpine resort, which was a scandal. Both of them talked for a long time about how to divide their shares in Interros.
ONEXIM Group, a private investment firm, is being set up.
After breaking up Interros in April 2007, Mikhail Prokhorov set up ONEXIM, a private investment endowment with the goal of boosting research and development in hydrogen fuel cells and nanotechnology. The total amount of money in the investment fund was US$17 billion, and the majority of that money came from the sale of Interros.
In April 2008, Mikhail invested Norilsk’s share in United Company Rusal, a huge Russian mining company owned by Oleg Deripaska, another Russian billionaire. In exchange, he got $5 billion in cash, $2 billion in debts, and about 14% of Rusal’s stock.
The deal that Prokhorov made with Rusal turned out to be very good timing, as the stock market crashed badly a few months later due to an unexpected drop in oil prices. The unexpected drop in oil prices caused the economy to slow down and cut the value of most Russian companies in half.
In 2008, when the world economy crashed, it was both good and bad for Mikhail Prokhorov. Even though the value of the stocks he owned in several companies went down a lot, he took advantage of the economic downturn by using his huge cash reserves to sign strategic contracts in areas other than mining.
During the global financial crisis, one of Prokhorov’s most well-known investments was buying 50% of the Moscow-based private investment bank Renaissance Capital for $500 million. He also bought a big share of RBC, which is Russia’s most popular site for financial news.
Investments and business deals around the world
Mikhail Prokhorov tried in 2009 to become the main owner of the NBA basketball team “New Jersey Nets.” In 2010, the NBA agreed to Mikhail Prokhorov’s offer, making him the league’s first owner from outside North America.
Mikhail Prokhorov’s Controversies
In January 2007, Mikhail Prokhorov was arrested on charges that he sent prostitutes to the rooms of his wealthy clients at a Christmas party in an alpine resort in France. He was freed in three days, and in 2009, a court case against him was dropped.
Forays into politics
Mikhail Prokhorov joined the pro-business Russian political party “Right Cause” in May 2011. He left the party, though, in September 2011.
In December 2011, he said he would run as an independent against Vladimir Putin in the 2012 presidential election. He didn’t win the election because he only got 7.94% of the vote.
Awards & Achievements
In 2006, he was given the “Order of Friendship” for his important role in helping the Russian economy grow and develop.
In 2011, he was given the “National Order of the Legion of Honor” by the French government.
His Personal Life
Mikhail Prokhorov is a self-made billionaire with a net worth of about $8.9 billion. He is one of the richest people in the world and also one of the most eligible bachelors. He likes to do kickboxing, snow skiing, and jet skiing. He is also the head of the Russian Biathlon Federation, runs his own website, and plays the guitar well.
Estiamated Net worth
Mikhail Prokhorov is a well-known Russian businessman and politician who used to own the Brooklyn Nets. At the time this article was written, Mikhail Prokhorov was worth $13.5 billion. Mikhail Prokhorov made his money in a way that was new for Russia. He “bought” Norilsk Nickel from the government and turned it into a huge global energy company.