Mikhail Fridman

Mikhail Maratovich Fridman (also transliterated Mikhail Friedman; russian: Михаил Маратович Фридман; he, מיכאיל פרידמן; born 21 April 1964) is a Ukrainian-born, Russian–Israeli businessman, billionaire, and oligarch. He is one of the co-founders of Alfa-Group, a multinational Russian conglomerate. According to ''Forbes'', he was the seventh-richest Russian as of 2017. (Moved to 11th place in 2020.) In May 2017, he was also ranked as Russia's most important businessman by '' bne IntelliNews''. In August 2022, Fridman had a net worth of $11.2 billion, according to the Bloomberg Billionaires Index.

In 1991 he co-founded Alfa-Bank, one of the largest private banks in Russia. After serving as CEO of TNK-BP, the 50/50 TNK-BP joint venture, for nine years, in 2013 he sold his stake in the company and co-founded the international investment company LetterOne (L1). Until 2022 Fridman was chairman of the supervisory board of Alfa Group Consortium, and also served on the boards of Alfa-Bank and ABH Holdings.

Prior to 2022, he was on the supervisory board of directors for VEON (formerly Vimpelcom) and X5 Retail Group. He is a member of the supervisory board of DEA Deutsche Erdoel AG, which is owned by LetterOne. Fridman has been a member of numerous public-facing bodies, including the Russian Union of Industrialists and Entrepreneurs, the Public Chamber of Russia, and the Council on Foreign Relations.

In 2022 the EU imposed sanctions on Fridman in response to the 2022 Russian invasion of Ukraine. Fridman said the EU's allegations were false and defamatory. Fridman subsequently decided to step down from the boards of LetterOne and Alfa Group so that they could avoid sanctions.

Throughout his career Fridman was subject to numerous legal challenges around the world. In December 2022, it was reported that he had been arrested in London on charges of money laundering.

Early life and education

Fridman was born in 1964 in Lviv, Ukrainian SSR, USSR, where he spent his youth. He graduated from high school in Lviv in 1980. He says he was denied entrance to Moscow's top physics college because he was Jewish, and instead attended the Moscow Institute of Steel and Alloys. He had various jobs while a college student in Moscow, including washing windows and founding and co-owning a student discothèque named Strawberry Fields. He also led a group of students who would queue for tickets at popular Moscow plays, and then use the tickets as hard currency to barter for rare goods and favours. Having studied metallurgical engineering, he graduated with distinction from the Moscow Institute of Steel and Alloys in 1986.

Career

Early years and Alfa companies (1980s–1990s)

After graduation Fridman worked as a metallurgical design engineer at the Elektrostal Metallurgical Works, a state electrical machinery factory, from 1986 to 1988.
As Russian politician Mikhail Gorbachev began to open up the economy in the late 1980s, in 1988 Fridman established a window-washing business, an apartment rental agency for foreigners, a company that sold used computers, and a company that imported cigarettes and perfumes, with fellow friends from college, employing students from various Moscow universities.

Armenian Robert Yengibaryan (russian: Роберт Енгибарян) provided strong assistance to Fridman and, later, Yengibaryan's son Vahe Yengebaryan (russian: Ваге Енгибарян), who was the Russian consul in New York from 2003 onwards, became very close to Fridman's business interests. In October 2019, Fridman told a Spanish court that he was a friend of Vahe Yengibaryan.

In 1988, along with German Khan and Alexey Kuzmichev, Fridman co-founded Alfa-Photo (also transliterated as Alfa-Foto), which imported photography chemicals. In 1989 the three partners founded Alfa-Eco (Alfa-Echo, Alfa-Eko, Alfa-Ekho), a commodities and eventually oil trading firm, and Alfa Capital (Alfa Kapital), an investment firm. Alfa-Eco and Alfa Capital developed into Alfa Group Consortium. The company, which initially focused on computer trading and copy machine maintenance, expanded into imports and exports and commodities trading, eventually becoming one of Russia's largest privately owned financial-industrial conglomerates, with interests in industries such as telecommunications, banking, retail, and oil.

Using $100,000 of his profits from his businesses to pay the required fee, in January 1991 Fridman co-founded Alfa-Bank. The company grew to become one of the largest private banks in Russia. Alfa Group's later divisions include Rosvodokanal, a private water utility; AlfaStrakhovanie, a diversified insurance company; A1 Group, an investment company; and X5 Retail Group, a large chain of food retailers.

Alfa Group flourished considerably after Fridman recruited Petr Aven, the former Minister of Foreign Economic Relations for the Russian Federation; in 1994 Aven became president and chairman of Alfa-Bank. By late 1996, thanks to the success of Alfa-Bank and Alfa Group, Boris Berezovsky, in an interview by the ''Financial Times'', named Fridman and Aven among the seven businessman and bankers who controlled most of the economy and media in Russia, and who had helped bankroll Boris Yeltsin's 1996 re-election campaign.

Fridman and Aven sold off most of their Russian government securities in early August 1998, prior to the ruble crisis of 17 August 1998, and emerged relatively unhurt from the 1998 Russian financial crisis. During the crisis, Alfa-Bank used its holdings related to TNK to avoid a debt default, and was one of the few Russian banks at the time to continue to allow customer withdrawals.

Retail holdings and X5 Retail (1995 to present)

Fridman's Alfa Group founded the ''Perekrestok'' (also transliterated ''Perekriostok'') chain of supermarkets in Moscow in 1995. Through a merger with the ''Pyatyorochka'' (also transliterated ''Pyaterochka'') supermarket chain, which had been founded in St. Petersburg in 1999 by Alexander Girda and Andrey Rogachev, Alfa Group founded the X5 Retail Group in 2006. X5 acquired another grocer, '' Kopeyka'', for $1.65 billion in December 2010. X5 is Russia's largest food retailer in terms of sales.

Alfa Telecom and Altimo (2001–2015)

Alfa Group acquired a 44% stake in Golden Telecom, a large telecommunications and internet company in Russia and the Commonwealth of Independent States, in 2001. Also in 2001, Alfa purchased a strategic ownership interest in Vimpelcom, a large cellular operator in Russia, and Fridman joined Vimpelcom's board of directors.

Alfa Group consolidated its telecom holdings as Alfa Telecom, and in 2005 renamed it Altimo. Its holdings and acquisitions included MegaFon, Vimpelcom, Golden Telecom, and Kyivstar. In December 2005 Altimo also acquired a 13.2% interest in Turkcell, the largest telecoms company in Turkey.

Fridman's desire to merge Vimpelcom and Kyivstar was thwarted by his Vimpelcom partner, the Norwegian telecoms group Telenor, which held stakes in both companies. Fridman resorted to protracted and aggressive efforts to strong-arm Telenor in 2005, and although the merger of Vimpelcom and Kyivstar was achieved in 2010, conflicts with Telenor over control of Vimpelcom lasted seven years in total.

From 2003 until 2007 Fridman's Altimo was locked in a complex four-year battle of claims and counter-claims of fraud with the Bermuda-based investment firm IPOC International Growth Fund associated with Leonid Reiman and Jeffrey Galmond over ownership of a 25.1% stake in MegaFon that was formerly held by Leonid Rozhetskin's LV Finance. James Hatt, a British telecommunications executive, represented Fridman's interests while Jeffrey Galmond, a Danish attorney, represented Reiman's interests during deliberations between the two groups. Altimo's ownership of the stake was finally maintained in 2007. During the dispute in 2005, Altimo hired the Haley Barbour-founded BGR public relations firm, which then hired a security firm, Richard Burt's Due Diligence, in order to infiltrate and obtain information about the KPMG independent investigations funded by Paula Cox, who was the Bermuda Minister of Finance, into the IPOC International Growth Fund. Richard Burt and Mikhail Fridman have a strong working relationship.

In 2012 Fridman sold his entire stake in MegaFon for $5 billion.

TNK-BP (2003–2013)

In 1997, Fridman had collaborated with Len Blavatnik and Viktor Vekselberg to purchase the state-owned TNK (Tyumen Oil Company), an oil company in Siberia, for $800 million. In February 2003, the British multinational oil and gas company BP agreed to form the TNK-BP joint venture with the AAR (Alfa-Access-Renova) consortium, which included Alfa Group, Blavatnik's Access Industries, and Vekselberg's Renova. After the merger, TNK-BP became the third largest oil producer in Russia, and one of the top 10 largest private oil companies in the world. Fridman served as TNK-BP chairman for nine years, and CEO for three years.

Prior to the TNK-BP joint venture, in 1999 Fridman had thwarted BP by seizing BP's stake in the Siberian oil company Sidanko, via bankruptcy maneuvers widely regarded as unfair practices. And although TNK-BP was highly successful financially, Fridman's relationship with BP during the TNK-BP years was contentious, and included blocking BP's 2011 planned partnership with Rosneft for Arctic oilfield exploration.

He resigned as CEO of TNK-BP in May 2012. In 2013, TNK-BP was sold to Russia's state-owned energy group Rosneft for $56 billion, with Fridman and his Russian partners receiving $28 billion for their 50% stake, at the height of crude oil prices.

Founding LetterOne and L1 Energy (2013–2015)

Using the proceeds from the sale of their stakes in TNK-BP, Fridman and his Alfa Group partners Khan and Kuzmichev established the international investment company LetterOne (L1) in 2013, and Fridman became the company's chairman. LetterOne's additional co-founders were Petr Aven and Andrei Kosogov. Headquartered in Luxembourg, the company was created to invest in international projects in energy, telecoms, finance, technology, and other sectors. As of 31 December 2013, LetterOne had $29 billion in assets under management. In May 2015 Mervyn Davies (Lord Davies) was appointed deputy chairman of LetterOne, and former Swedish Prime Minister Carl Bildt was appointed as the board's advisor.

In 2013 LetterOne also formed L1 Energy, an energy investment vehicle, initially focused particularly on undervalued international oil and gas assets during the slump in oil prices. John Browne (Lord Browne) was appointed to its advisory board, and in March 2015 became its chairman.

L1 Energy's North Sea oil assets (2015)

On 3 March 2015, L1 Energy acquired the international oil and gas company DEA from the German utility RWE for $7 billion (€5.1 billion). Headquartered in Hamburg, Germany with extensive assets in the British North Sea, RWE DEA had total natural gas production output of 2.6bn cubic metres in 2013. The purchase was opposed by the UK Energy and Climate Change Secretary Ed Davey, who raised concerns that Fridman might one day face international Ukraine-related sanctions against Russian companies and individuals which could force L1 Energy to shut down production in the North Sea, thus imperiling oil supplies and 5% of Britain's North Sea natural gas output. On 4 March 2015, Davey gave Fridman a one-week deadline to convince the UK government not to force him to sell the North Sea oil and gas assets. In April 2015, the government gave Fridman up to six months to sell.

In October 2015 Fridman and the LetterOne Group sold L1 Energy's British North Sea assets to Ineos, a Switzerland-based petrochemical company owned by Jim Ratcliffe, for $750 million. The British government assured LetterOne that the forced sale was "not a judgement on the suitability of LetterOne's owners to control these or any other assets in the UK".

In October 2015 LetterOne Group acquired German utility company E.ON's equity interests in 43 Norwegian oil and gas licences, including interests in three producing Norwegian fields, all located in the North Sea, for $1.6 billion.

LetterOne's telecom and other technology assets 2015 to present

In April 2015, LetterOne Technology (L1 Technology) was launched in London. Its focus was on buying "struggling telecom or technology companies that require a fresh infusion of capital". Various advisory board members were appointed including Brent Hoberman, Denis O'Brien, and Sir Julian Horn-Smith.

The L1 Technology fund began acting as a holding company for the 48 percent stake in Vimpelcom owned by Fridman and his partners. The fund also has a 13.2% share in the Turkish telecom company Turkcell, which since 2005 has been hampered by a long-running feud between its three largest shareholders: Cukurova, owned by Turkcell founder Mehmet Emin Karamehmet, Fridman's LetterOne via Alfa Telecom/Altimo, and Sweden's Telia Company.

In February 2016, Vimpelcom agreed to pay $800 million to settle U.S. and Dutch claims that it had bribed officials to win contracts in Uzbekistan between 2006 and 2012. A year later the company rebranded itself VEON, and changed its focus to mobile internet services such as banking, taxis, and messaging.

In February 2016, Fridman's LetterOne fund invested $200 million in Uber. In August 2016 LetterOne invested $50 million in telecommunications start-up FreedomPop, to help finance its international expansion.

Additional activities 2012 to present

In 2012 Fridman partnered with American real-estate developer Jack Rosen in a joint venture to invest $1 billion in distressed real estate properties along the U.S. East Coast.

In June 2016, LetterOne prepared to expand into healthcare by launching the $3 billion fund L1 Health in the United States, for investments in the global healthcare industry.

In October 2016, Alfa Group acquired Ukrainian bank Ukrsotsbank, by offering its parent, the Italian financial conglomerate UniCredit Group, a minority stake of 9.9% in ABH Holdings.

In December 2016, LetterOne launched L1 Retail, headquartered in London, to invest $3 billion in "the retail stars of tomorrow" in Europe and the UK.

In 2016 Fridman coined the term "Indigo Era", for his theory of a global shift to an emerging era of economics based on creativity and digital skills rather than on natural resources. In 2017 he funded a £100,000 Indigo Prize for new economic-measurement models based on the paradigm.

In June 2017 LetterOne's L1 Retail division acquired Holland & Barrett, Europe's largest health-food store chain, for £1.8 billion ($2.3 billion). Also in 2017 Fridman, via LetterOne, invested $3 billion in Pamplona Capital Management, a private-equity firm that was founded by Alexander Knaster