Month: June 2010

Ukrainian Billionaire Akhmetov Tries For Another Steel Mill

On Jun 17 2010

After recently losing Ukraine’s fourth largest steelmaker, Zaporizhstal, to an unnamed group of Russian investors, Rinat Akhmetov, Ukraine’s wealthiest (with a fortune estimate by Forbes at $5.2 billion) is at it again.

Akhmetov’s Metinvest, Ukraine’s largest vertically integrated steel group, is negotiating a merger with Mariupol Ilyich Steelworks, the country’s largest flat rolled steel producer.

According to a note from financial services firm, Millenium Capital, the merger is a win-win for both parties and will help Akhmetov as he tries to take Metinvest public. “[Mariupol] will get access not only to the raw materials but also to the Group financial resources for modernization implementation and will improve the corporate governance too. On the other hand, Metinvest will also benefit from the impending merger. Firstly, it will joint the top 20 biggest steel producers in the world, with a crude steel production capacity of more than 17m tonnes/year, which will have a positive effect on the prospects of its long discussed IPO. Secondly, the assortment of the Holding production will increase and, thirdly, the capacity utilization will increase.”

Akhmetov’s holding company confirms the negotiations, stating, “Both the parties are considering possible scenarios of co-operation and of combining resources in order to strengthen the position of Ukrainian steelmakers on international markets.”

The obstacle: who owns the mill? On May 26, two men claiming to represent offshore companies registered in Cyprus, Boris Podolsky and Ilya Gorn, announced the sale of Mariupol to an unknown investor. Meanwhile, Volodymyr Boyko, Mariupol’s chief executive officer and manager of its shares, has stated to Ukrainian press that he “took part in no oral or written agreement to transfer their ownership.”

Russian giants like Severstal (owned by Russian billionaire Alexei Mordashov) are said to be in the mix. Will the Russians again foil Akhmetov’s bid to create a Ukrainian steel giant?

Polish billionaire buys Ukrainian gas firm in middle of Naftogaz debate

By admin

On Jun 15 2010

In energy

Polish richest man, billionaire Jan Kulczyk, whose fortune was estimated by Forbes to be $2.1 billion in March, is increasing his energy investments in Ukraine.

His Kulczyk Oil Ventures, through its subsidiary, Loon Ukraine Holding, bought a 70% stake in of one of Ukraine’s largest private producers of natural gas, KUB-Gas, for $45 million; the deal was completed last Friday. Kulczyk Oil Ventures, which went public in May on the Warsaw Stock Exchange (symbol: KOV); used part of the proceeds from the IPO to close deal in Ukraine.

Dariusz Mioduski, the president of Kulczyk Oil Ventures, told the Polish press that, “We plan to increase production in Ukraine and KUB-Gas has enough potential to at least double its current production.” Kulczyk Oil is also exploring opportunities across Central and Eastern Europe as well as in other hydrocarbon basins in the Middle East and Southeast Asia.

Poland’s foray into Ukraine comes in the midst of news from Russia that its Gazprom gas monopoly has offered to merge with Ukraine’s state energy firm, Naftogaz. Ukraine has significant gas resources that need development investment.

New World (that is China, India) Outpaces Old World 2 to 1

By admin

On Jun 10 2010

In Uncategorized

Greece, Spain and Hungary once spawned mighty empires (8th to 6th century BC, 15th century AD and 19th century AD respectively), but now their crumbling economies are far outshined by cousins in the East – particularly China and India.

Yes we all know China and India are giants but today consulting firm BCG came out with its report on Global Wealth trends which has some very interesting empirical data.

Wealth in Asia (excluding Japan) will grow at twice the global rate and in China and India, wealth is expected to grew more than three times the global rate from 2009 to 2014. Another interesting statistic: in China – communist China that is – there are approximately 670,000 millionaire households. There are more millionaires in China that in the old world countries of the United Kingdom (485,000 millionaire households), Germany (430,000 millionaire households), Italy (300,000 millionaire households), Switzerland (285,000 millionaire households) and France (280,00 millionaire households). Only the US and Japan have more millionaire households with 4,715,000 millionaire households and 1,230,000 millionaire households respectively.

But the Old World still has something of an edge – Europe is the wealthiest region overall with $37.1 trillion in assets under management. It will need it for all those bailouts.

Building Argentina

By admin

On Jun 08 2010

In Investing Ideas

I recently wrote two pieces for the Project Management Institute that focused on infrastructure project opportunities in emerging markets outside the BRICs – Chile, Vietnam, Nigeria, Poland, Turkey, Costa Rica and Kenya were the countries that made it into the final edit. I also did research on Argentina and I’d like to publish that here because the country is fascinating and José D. Esterkin and Ana Maria Rodríguez had interesting insights.

The Argentinian economy deflated with the global recession, and its current president, Cristina Fernández de Kirchner, has had a rough couple of years. But if you look at where the project management demand is you can see which sectors will lead Argentina out of its slump (and which sectors you may consider investing in).

One is information technology. “The industry is growing rapidly because fees are lower than in other places of the world and professional level is very high,” says Ana Maria Rodríguez, PMP, executive manager, ERA Project Management, Rosario, Argentina.

Petrochemical, cereal (biodiesal plants), steel, and food companies are also requesting project management at global standards.

According to José D. Esterkin, PMI Buenos Aires, Argentina Chapter Esterkin awareness of project management in Argentina has grown exponentially over the past five years as companies focus on project management methodology to have predictability in their plans. This is especially true when dealing with an economy in flux, and changing regulations. “The challenge is to develop successful projects in spite of government measures,” says Ms. Rodriguez.

Technical skills are very high in Argentina. The need now is to combine the hard skills with soft skills like negotiation, leadership and communications. Ms. Rodriguez adds companies will need specialized training in certain areas of PM such as Program and Portfolio Management and Risk Management.

“We don’t have many project managers who are certified, we need to make project manager as a profession like lawyers”, posits Mr. Esterkin.

Ukraine’s Richest Loses Deal for Coveted Steel Mill

By admin

On Jun 02 2010

In Steel

Rinat Akhmetov, Ukraine’s wealthiest man with an estimated $5.2 billion steel and coal fortune according to Forbes, lost his bid for Ukraine’s fourth largest steelmaker, Zaporizhstal, in a surprise twist according to reports from Ukraine.

This week a group of undisclosed Russian investors took control of Zaporizhstal for a reported UAH 1.7 billion (about $220 million) supposedly financed by Russia’s state-owned Vneshekonombank (VEB Bank). That’s just over a month since the news broke back in April that Akhmetov’s Metinvest steel and mining holding company and Korea’s steel producer POSCO were on track to complete the deal to acquire a controlling interest in the steelmaker for $2 billion (according to Ekonomicheskaya Pravda).

The unexpected loss for Akhmetov and the rumors on price discrepancy are raising concerns about Russia’s influence in Ukraine under the new presidential administration of Victor Yanukovich who has been known to favor Russia. Also curious: Akhmetov is a member of Yanukovich’s Party of Regions.

Back in October, Metinvest and POSCO signed a memorandum of cooperation which called for the two firms to “exchange information and technologies to cooperate in seeking steel and mining business opportunities in Eastern Europe and former Soviet Union countries including Ukraine.” If the deal for Zaporizhstal had closed, Metinvest would have had an expanded product line, Zaporizhstal would have had access to Metinvest’s raw materials and POSCO would have become the second largest steel producer in the world according to investment bank, Millenium Capital.

In a research note, Millenium wrote “withdrawal of Metinvest from the deal undermines the market’s expectations of the dividend payout to have been approved at the next general meetings of Azovstal and Avdiivka Coke Plant. It is an open secret that Metinvest has started earlier to concentrate cash funds for the Zaporizhstal purchase, which funds are no longer needed after Metinvest failed to close the deal.”