Most Admired
Their reputations, their success stories - even their mere names - are sufficient for foreign investors to commit their money, entrusting millions of dollars to these men. They know how to play a game of attrition, how to surround themselves with the best of the best, and how to run companies in the most difficult of times. BRICS Business Magazine offers readers its list of the entrepreneurs who best characterize modern Russia.
Sergei Galitsky
Magnit, CEO
To command a net worth of $8.5 billion in today’s Russia you do not have to have your own oilrig or high-ranking patrons - you do not even have to be living in Moscow. Sergei Galitsky is the living proof. The 45 year-old founder and majority shareholder of a retail food chain called Magnit built his entire career around that premise.
Galitsky started out by selling household chemicals and food products on a small scale, opening his first store in the remote provincial town of Krasnodar in the middle of the economic crisis in 1998. A former banker, for decade and a half he toiled tirelessly to build his empire despite the economic slowdown and formidable competition from the capital.
His achievements are impressive. Last year his company opened 1,575 new stores operating in various formats under the Magnit brand, bringing their total number to 6,884. No other company in Russia could boast the same results, making it the undisputed leader in the country’s manufacturing and retail sector in terms of business efficiency. Following the first quarter of 2013, the company became the industry’s ‘supreme champion,’ leaving its main competitor – X5 Retail Group – far behind in terms of revenues: 131.2 billion rubles ($4.2 billion) – up 30% from last year – compared to X5’s 126.3 billion rubles ($4 billion).
These latest achievements might help Magnit overcome its “provincial inferiority complex” from being “always in second place,” which Galitsky described in a Forbes interview in March, not least because the company, despite its enormous size, continues to develop at a fast pace, finding new niches and expanding its food stores; the number of new stores expected to open in 2013 is at least the same as last year. Magnit is also aggressively pursuing a different line of business – cosmetics. In 2010, the company launched a new chain, Magnit Cosmetic, which today operates 706 stores. Late last year, Galitsky also launched Rouge, a new chain which he hopes will soon become a force to be reckoned with in the luxury perfume market, putting competitive pressure on current market leaders L’Etoile and Rive Gauche.
Last year his company opened 1,575 new stores operating in various formats under the “Magnit” brand bringing their total number to 6,884 (no other company in Russia could boast the same results), remaining the undisputed leader in the country’s manufacturing and retail sector in terms of business efficiency
Arkady Volozh
Yandex, CEO
Yandex founding father Arkady Volozh says he simply “collects” the people responsible for most of his company’s successes, remaining very modest when it comes to his own role. “One might think that I built the whole of Yandex. Of course not,” he told GQ Russia when it featured him as Man of the Year 2012.
But modesty is clearly not appropriate when it comes to Yandex’s achievements. Set up virtually in a garage in 1997, its first assets were three servers costing $10,000, with a total hard disk capacity of one megabyte. The company went on to become the largest player in the Russian internet search engine market. According to LiveInternet.ru, between February and April 2013 Yandex was responsible for generating 61.9% of all search traffic in the .ru domain, leaving the competition far behind.
Even though the company aggressively pursues other avenues, the search engine remains its bread and butter, leading to revenues which in the first quarter of 2013 totaled 7.8 billion rubles ($246.8 million). Promoting the search engine in overseas markets is most likely to become the company’s main objective in the near future.
[Yandex takes interest in] “any country where there is no competition on the market for search engines. In other words, any place other than the United States, China, Korea or Japan. These are highly competitive markets and I do not think it would make any sense to try our luck there. Anything else, including Europe, Latin America, Africa, the Antarctic, the Moon or the Mars hold a great deal of potential for us”, Volozh told RIA Novosti in an interview in July 2012.
However, it remains unclear what role the founder of Yandex is going to play in pursuing these plans. Following the company’s triumphant NASDAQ initial public offering (IPO) in May 2011, 130 employees of the company became millionaires overnight, while Volozh himself earned over a billion dollars. Forbes magazine estimates his net worth at $1.5 billion. The 49 year-old CEO told GQ that he had recently felt like an old man in his company, where the average employee is 28 years old. In March, Volozh sold 5.14 million of his Yandex shares for $ 117 million. However, few people believe that he is truly about to retire.
Modesty is clearly not the best of virtues when it comes to Yandex’s achievements. Set up virtually in a garage in 1997 (its first assets were three servers costing $10,000 with a total hard disk capacity of one megabyte). The company went on to become the largest player in the Russian internet search engine market
Leonid Mikhelson
Novatek, Chairman of the Board
In late January last year, Russian stock exchange traders were excited to discuss the latest rumor that Leonid Mikhelson, CEO of Novatek – Russia’s largest independent gas company – was on his way to replace Alexei Miller as Gazprom CEO. The way the market reacted to this ‘news,’ which proved to be a hoax, spoke volumes about what such a reshuffle could mean for both companies. Shares in Novatek – one of the most popular companies on the Russian stock exchange – went into dark red, while Gazprom’s securities, which had been steadily falling, suddenly shot up.
Mikhelson himself was anything but pleased to see the market’s reaction to the news of his ‘appointment.’ “Novatek shares are falling. Personally, I do not like it. I generally don’t like rumors or conjectures about myself,” he stated in an interview with the Vedomosti newspaper in December.
There has always been plenty of talk and speculation about the 57 year-old CEO. One story has something to do with Gennady Timchenko, Mikhelson’s partner at Novatek and another petrochemical company called Sibur, who owns the largest Russian energy trader Gunvor and is rumored to be friends with President Vladimir Putin and Rosneft CEO Igor Sechin.
Many argue that it is these people’s lobbying efforts that have led to Novatek’s recent successes, including the quick development of mega-ambitious gas field project Yamal LNG, which Mikhelson’s company runs jointly with French company Total. The gas produced at this field is intended to be liquefied and exported abroad. That is why Novatek is now taking proactive measures to challenge Gazprom’s export monopoly, putting pressure to bear on Miller’s company in the domestic gas market.
These efforts are intended to significantly boost Novatek’s market capitalization. Mikhelson believes that his company’s true value is at least $100 billion, which is approximately double its current market capitalization or on a par with Gazprom’s current value.
These efforts are intended to significantly boost Novatek’s market capitalization. Mikhelson believes that his company’s true value is at least $100 billion, which is approximately double its current market capitalization or on a par with Gazprom’s current value.
Herman Gref
Sberbank of Russia,
CEO and Chairman of the Board
After taking the helm at Sberbank in November 2007, this former Russian Minister for Economic Development and Trade didn’t give up his prominent public profile. Herman Gref has widely commented on a broad range of topics, from measures to stimulate the Russian economy and liberalizing the Central Bank’s interest rate policy, to reducing insurance contributions for small and medium-sized businesses. He is one of the few public servants who can truly afford to criticize the government, and he has done so quite vociferously in recent years.
It is certainly no coincidence that it was Gref who called upon the people of Russia to take responsibility for their own well-being and not pin their hopes on the government – a rare move for a public servant, even a former one.
“What is typical for us is to expect something that should not be expected at all. We expect that the federal or regional government would solve all of our problems. We expect that the employer would somehow make our lives better; we constantly count on someone else to do the job for us. I think it is high time we put an end to all these expectations. We should come to realize one simple truth that our entire life is in our hands. If we don’t make a difference in our life, nobody else would,” he said in April at The Russia Forum 2013, organized by Sberbank.
According to Gref who firmly believes in the principle of Kaizen, transforming the mentality of his employees and trying to get them to focus more on the clients and at the same time implement lean technologies, was the most difficult part of his program to reform Sberbank, launched five years ago. On the strategic level the reform was to turn the Russian retail banking giant into one of the most diversified international banking groups in terms of efficiency, geography, assets and profits.
In January 2012, Sberbank closed a deal to buy Russia’s largest investment company, Troika Dialog (rebranded as Sberbank CIB), for $1.25 billion. Last year it also acquired DenizBank, a Turkish subsidiary of the European Dexia, for $3.5 billion – the largest deal in Sberbank’s corporate history.
This policy has yielded some very tangible results: as early as in 2011 consulting company Millward Brown Optimor for the first time included Sberbank among its top one hundred global brands (ranked 99th), putting its value at $8.5 billion. The 2013 rankings saw the bank’s brand value increase to $12.7 billion, moving it up to 70th place. And there is yet time to press on, as the 49-year-old CEO’s contract will only lapse in late 2015.
It is certainly no coincidence that it was Gref who called upon the people of Russia to take responsibility for their own well-being and not pin their hopes on the government – a rare move for a public servant, even a former one
Mark Kurtser
Chief Obstetrician and Gynaecologist of the City of Moscow, Chairman of the Board of Directors at MD Medical Group Investments (MDMG)
A billionaire doctor who owns a large public medical company listed at the London Stock Exchange? Who could imagine a story like that in Russia even a couple of years ago? Today, however, the precedent has been set and the name of the man who managed to pull it off is Mark Kurtser.
In October 2012, the Cyprus-based MD Medical Group (MDMG), which operates a chain of perinatal clinics in Russia under the brand ‘Mother and Child,’ launched an initial public offering (IPO) on the London Stock Exchange, managing to sell 35% of its equity for $311 million. In the five months following the IPO, which also caught the attention of the Russian Direct Investment Fund (RDIF), MDMG’s market capitalization went up by more than 40%. By March 2013, the 56-year-old Kurtser, who owns a 62% stake in the company, had officially become a billionaire.
The goodwill demonstrated by investors toward the company, which currently operates 12 medical centers in five cities across Russia including the perinatal centre in Moscow, is hardly a coincidence. In 2012, Mother and Child’s net profit internationally went up by 66.4% to reach 1.5 billion rubles ($48.7 million). But this is hardly the end of the line for the company, considering that it continues to invest its IPO-generated funds to further its development.
However, despite these significant business achievements, Kurtser, who is described by his friends as a “genius but a tough doctor who is not easy to deal with,” still considers himself primarily a medical doctor. He said in an interview with Kommersant late last year, “Every day of my life I have been a doctor. Every day at 7 a.m. I am in the surgery, at night I am delivering babies. Even now when my business has grown large I still spend most of my time performing my medical duties.”
Sometimes coincidences do happen, and some of them produce such wonderful companies as MDMG along with thousands of beautiful babies.
“Every day of my life I have been a doctor. Every day at 7 a.m. I am in the surgery, at night I am delivering babies. Even now when my business has grown large I still spend most of my time performing my medical duties”
Nikita Mishin, Andrei Filatov, Konstantin Nikolaev
Commercial Director, Executive Director and Director General at N-Trans Group.
How does one go about turning a small-time shipping company into the largest transport and logistics conglomerate in Russia, the C.I.S. and the Baltic region with over two billion dollars in annual turnover? “It is not that difficult,” says Andrei Filatov, Executive Director at the N-Trans Holding.
In 1996, Filatov, 42, together with Nikita Mishin, 43, and Konstantin Nikolaev, 43 – his shipping business partners – incorporated a company called Severstaltrans. Their idea was to create a business capable of offering consignors the full spectrum of solutions. Financial support came from Alexey Mordashov, owner of Severstal, a metallurgical giant.
Following Russia’s default and currency depreciation in 1998, logistical services went on the rise, revitalizing Russian exports. Coupled with reforms launched by the Ministry of Transport, the partners had a rare chance to capitalize on the situation.
They opted to invest their profits in development, manufacturing locomotives and acquiring train cars, seaports and other transport infrastructure. The strategy paid off. In just several years N-Trans (the name the company was given in 2007 when the partners bought out Mordashov’s 50% stake) became one of Russia’s leading transport operators, specializing in terminal container handling and railway freight transport.
Today, N-Trans is a group that consists of more than two dozen different enterprises, including public companies such as railway group Globaltrans and port operator Global Ports, with revenues reaching 68.6 billion rubles in 2012.
What is next? The owners of N-Trans plan to make further investments to develop their business along with Russia’s transport system with a greater emphasis on infrastructure. In May last year, Filatov told Russian newspaper RBC Daily, “I think that the railway sector is one of the best things that the infrastructure market in Russia, and in the world, has got to offer. After all, Russia is a country that has a vast railway infrastructure.”
Following Russia’s default and currency depreciation in 1998, logistical services went on the rise, revitalising Russian exports. Coupled with reforms launched by the Ministry of Transport, the partners had a rare chance to capitalize on the situation
Mikhail Kusnirovich
Bosco di Ciliegi,
Supervisory Board Chairman
Mikhail Kusnirovich admittedly likes to make people happy. In the process he claims to derive a great deal of pleasure too. It is no coincidence, therefore, that the same festive spirit and joie de vivre lie at the heart of Bosco di Ciliegi. The group manages two hundred shops and boutiques selling some of the world’s most famous brands of clothing, accessories, watches, perfume, cosmetics and jewelry. It also has beauty parlors, a dental clinic, and even its own restaurant operating under its Bosco brand. Many of these outlets are located in the Moscow GUM mall also controlled by the group.
However, there is no doubt that the 47-year-old entrepreneur’s core interests and business talents lie in the world of sports: Bosco is also a manufacturer and purveyor of sportswear collections. Since 2001, the company has been the official apparel supplier and regular sponsor of the Russian Olympic Team, as well as partner of the Russian National Olympic Committee.
The kind of money that Bosco seems to be ready to part with to achieve these objectives has been particularly impressive of late. According to Kusnirovich, the company’s sponsorship contract with the Sochi 2014 Olympic Games is valued around $100 million an amount Bosco is going to recover with interest in net profits from the pre-Games “mega sales” (with the total volume expected to reach at least $1 billion). Kusnirovich hopes that the company will acquire a massive production and distribution base as an added bonus thanks to its participation in the Olympic festivities.
Considering the company’s ambitions, a bit of global publicity would definitely not hurt. “We would like to make sure that our brand goes international. You know, the very word ‘Russia’ is a brand in and of itself. I think we can and should successfully promote it,” Kusnirovich told Kommersant newspaper in March 2012. So far Kusnirovich has left no room for anybody to ever doubt his lucky star.
Bosco is also a manufacturer and purveyor of sportswear collections. Since 2001, the company has been the official apparel supplier and regular sponsor of the Russian Olympic Team, as well as partner of the Russian National Olympic Committee
Oleg Tinkov
Tinkoff Credit Systems (TCS Bank),
Chairman of the Board
Oleg Tinkov’s name has long been a brand in its own right – it has become synonymous with his flamboyant style, ability to think out of the box and the inevitability of his success. Throughout his entire career Tinkov has always been guided by an algorithm, which he mastered to perfection: first build a company and a brand, then sell it at a profit and invest the proceeds into a new project of a larger scale.
This strategy was used with electronics chain Teknoshok, which Tinkov sold for $7 million in 1997; with dumpling-producing company Daria, sold in 2001 to Roman Abramovich; and ultimately with the brewing company Tinkoff. In a $201 million deal in 2003, Tinkoff was acquired by Belgium-based InBev, and Tinkov himself walked away with $80 million in net profit.
It seems that his current project – the TCS internet bank that he created in 2006 in the image of the U.S. Capital One bank – is also likely to change hands sooner or later. Since its inception, the company has transformed itself into one of Russia’s banking market leaders, specializing in credit cards and deposits. In the meantime, TCS continues to grow as a business at an unbelievable rate: in 2012 the value of the bank’s assets increased 2.4-fold, reaching $2.2 billion, with net profit up 78% to $122 million.
So when should potential strategic investors expect the long-awaited public offering? In September 2005, in an interview with the Vedomosti newspaper, Tinkov admitted that his dream was to make a billion dollars. “When I leaf through Forbes magazine, I think it is unfair that my name is not on this list of billionaires. I need to correct this mistake. I read that all billionaires are outrageously sexy.”
In May 2013, the 46-year-old entrepreneur finally made it into the Forbes list of the richest Russians – the magazine estimates his net worth at $700 million. Considering the rate at which TCS has been growing lately, he might not have to wait much longer.
In 2005, Tinkov admitted that his dream was to make a billion dollars. “When I leaf through Forbes magazine, I think it is unfair that my name is not on this list of billionaires. I need to correct this mistake. I read that all billionaires are outrageously sexy”
Alexander Nesis
IST Group, President
51-year-old Alexander Nesis is the owner of one of Russia’s largest private investment and industry holding companies. IST Group manages finances, extracts precious metals, builds transport engineering capabilities, provides industrial engineering solutions and develops commercial and industrial property, and it is worth nearly $8 billion. Nesis claims his job is not unlike that of a developer. There is one minor difference, however. Rather than buildings, he constructs companies to the highest of standards and then sells them to security market players or strategic investors.
“IST’s MO is to look for ideas, lay the foundation, put together a team, see the idea take shape and then sell the product. We consider ourselves developers in the broadest sense of the word. I do not just come to work to manage some current business processes, I come to look for an idea that may radically change the asset’s quality and price,” said Nesis in an interview with Vedomosti in November 2005. “My product is not gold, it is not some ship, it is an enterprise.”
A looming merger between the IST Group’s very own NOMOS Bank (with assets valued at 640 billion rubles or $20.3 billion, ranked 11th in Russia) and Otkrytie Bank (240 billion rubles or $7.6 billion, ranked 32nd) may well become another high profile and potentially very lucrative project for IST, likely to produce Russia’s second-largest private banking group.
News leaked in April that the intricate and complex deal agreed last year and slated to be closed in 2014 was likely to flop. However, experts believe that it is just a temporary hiccup. Merging the two companies’ banking assets under a single brand would produce a significant synergetic effect, taking efficient management of these assets to a new high and ultimately raising their value. This is precisely the sort of transaction that Alexander Nesis has built his success on as a ‘developer’.
“IST’s MO is to look for ideas, lay the foundation, put together a team, see the idea take shape and then sell the product. We consider ourselves developers in the broadest sense of the word”
Sergey Kogogin
Kamaz, CEO
In late May, the KAMAZ board of directors recommended that the general shareholders’ meeting vote in favor of paying out dividends – for the first time in 20 years – from one tenth of last year’s net profit, which was up 72.4-fold reaching 4.9 billion rubles ($155.1 million). A nice chunk of this, totaling 25 million rubles, is payable to Sergey Kogogin, who owns roughly 5% of the automotive giant and has been at the helm of KAMAZ for 20 continuous years.
Having skillfully steered his company out of the recent crisis, the 55-year-old Kogogin now focuses on long-term prospects, trying to significantly boost the company’s efficiency and the quality of its products, laying the groundwork for future success.
In 2012, KAMAZ completed a major cost-optimization exercise. At roughly the same time it launched a five-year upgrade program which, according to Kogogin, will cost nearly $2 billion. Several overseas partners will also get on board, including the Germany-based Daimler, which already owns an 11% stake in KAMAZ, and Zahnradfabrik, as well as Cummins Corporation from the U.S. Kogogin and his team can certainly take the credit for the fact that these partners have already set up joint ventures with KAMAZ to produce Mercedes-Benz heavy-duty trucks, gear boxes and engines.
Kogogin hopes that all of these efforts will raise the automotive giant’s game to a revolutionary technical level, enabling the company to start mass production of a new line of trucks capable of competing with imported models by 2015-2016. In December 2012, he told Vedomosti, “We want to reach the upper part of the medium price segment and the lower part of the premium segment. Kamaz has never seen such a large-scale project that would entail a full production overhaul to manufacture a brand new model range. Now we are in the midst of an evolutionary phase-shift.”
The KAMAZ chief has lately been toying with yet another unconventional idea that is likely to yield his company and its shareholders significant dividends. In April, during the Russia Forum 2013, Kogogin presented his “gas attack” concept: converting vehicles in Russia to run on a more efficient and environmentally friendly fuel – natural gas. Having invested heavily in various gas technologies, in late May, KAMAZ signed an agreement with Gazprom enabling it to use gas as a motor fuel. Needless to say that Kogogin’s company is not about to let any competitors take over this new market that he is personally helping to build.
In April, during the Russia Forum 2013, Kogogin presented his “gas attack” concept: converting vehicles in Russia to run on a more efficient and environmentally friendly fuel – natural gas