Alisher Usmanov, the Muscovite who controls the Metalloinvest metals and mining company, trumped steel billionaire Vladimir Lisin as Russia’s richest man through timely bets on tech companies including Facebook Inc.
Usmanov’s personal net worth now totals more than $20 billion, according to the Bloomberg Billionaires Index, pushed up mainly by the value of his stake in Facebook Inc., which is now worth more than $4 billion, based on Bloomberg data. He also owns stakes in Twitter Inc., Groupon Inc. and China’s Alibaba Group Holding Ltd..
The value of the 5.5 percent stake in Facebook that Usmanov controls through Digital Sky Technologies, or DST, has probably jumped ninefold since 2010, when he accumulated shares in the social network leader. Usmanov, 58, owns about 80 percent of DST, according to a person familiar with the matter who declined to be identified because the information isn’t public.
“We saw potential in Internet companies a few years ago and it was then that we began to invest in such private companies as Facebook, Groupon, Zynga and others,” Usmanov told Bloomberg Markets magazine in January.
That diversification of assets allowed Usmanov to increase his wealth in a year in which falling metals prices hurt the fortunes of his richest Russian peers, such as OAO Novolipetsk Steel’s Lisin and OAO Severstal’s Alexey Mordashov.
‘The First Oligarch’
“Most Russian billionaires tend to stick to their familiar industries and have generally done poorly,” said Chris Weafer, chief strategist at Moscow-based Troika Dialog, Russia’s oldest investment bank. “With Facebook, Usmanov is the first oligarch to make such a major investment outside of his core Russia business and to show huge success,” Weafer said.
The bulk of Russia’s billionaires -- Usmanov included -- built their wealth from 1990s investments in commodity-related industries. Many ventured out during the past decade to buy assets abroad but didn’t share in Usmanov’s good fortune.
Mordashov, after failing in a bid to become steelmaker Arcelor SA’s largest shareholder in 2006, spent $2.2 billion to buy three U.S. plants, only to sell those last year at a loss.
At the same time Mordashov was selling, Lisin, 55, was buying -- and borrowing. His NLMK almost doubled its debt to $2.9 billion last year after consolidating seven unprofitable European and U.S. mills from Swiss producer Duferco Group under a 2006 accord. Lisin’s fortune is worth about $18.9 billion.
While his metals peers were focused on the industry they know best, Usmanov joined forces with Russia’s savviest technology investor, Yuri Milner, in his DST investment fund in 2008. By February 2010, the partners held 8.2 percent of Facebook, according to the IPO prospectus for the Menlo Park, California-based company, which was filed Feb. 8.
DST later transferred more than 2 percent of Facebook to Mail.ru Group Ltd., Russia’s largest Internet company. DST spun off Mail.ru in 2010 and Usmanov now owns 25 percent of the Moscow-based company outright.
Facebook reported a 24-fold increase in sales over the past five years to $3.7 billion in 2011, according to a company filing on Feb. 1. SharesPost Inc., a marketplace for trading in private companies, in March 2010 estimated Facebook’s value at $11.5 billion. Facebook may seek a valuation of $100 billion in its IPO later this year, which would be the biggest ever for an Internet company.
Usmanov last April said in a telephone interview that he was doubtful that he would be able to repeat the gains he’d enjoyed up to that point in his foray into technology.
“Investments in Internet companies start to bring less profit compared with two or three years ago when we began to invest in them almost at a startup level,” Usmanov said then.
Four months later, though, DST bought about 5 percent of San Francisco-based Twitter, the closely held microblogging service with more than 100 million users, for about $400 million.
“Usmanov’s success is likely to encourage others of the merit of diversification,” said Troika’s Weafer. “We will see more high-profile investments from Russia’s oligarchs in industries with fast growth potential in the future.”
The dip in market values for some of Russia’s biggest metals companies suggests why that may be right.
NLMK, Lisin’s main asset, and Oleg Deripaska’s United Co. Rusal, the world’s largest aluminum producer, have plunged about 47 percent and 48 percent, respectively, in the last 12 months, to about $14.7 billion and $13.2 billion.
It could be worse.
Viktor Rashnikov’s Magnitogorsk Iron & Steel has tumbled 54 percent in the same period, to $5.6 billion.