Jul
26
2010

Feeling War

Yesterday’s New York Times Week in Review Article: “The War – A Trillion Can Be Cheap” made a very insightful point about the fact that since we do not feel the war, we are divorced from it. Meanwhile it is draining our collective coffers at a startling rate.

Meanwhile I am currently reading, “The Balkan Trilogy,” by Olivia Manning which chronicles the lives of Harriet and Guy Pringle as they live through World War II, first in Romania, then escaping to Greece (which is where I am in the book). The semi-autobiographical tale makes you feel the privation wrought by war – the lack of food (as the Greeks fight the Italians all the best food goes to the soldiers, what is left is intestines), the lack of comforts like a coat for winter (Harriet, having had to flee Romania when the Nazis occcupied the country fled without her one winter coat, and wonders as the Greek winter sets in if she will have the money to buy another.)

How lucky are we today to not feel war as the NYT points out  - to have the choice of meals and closets full of clothes. We should not forgot the toll previous wars wrought, and should be more thoughtful about staying on our current course.

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Jul
22
2010

Ukraine Econ Upturn As its Billionaires Start to Raise Cash

Ukraine’s youngest billionaire, Kostyantin Zhevago, who almost lost his iron ore producer, Ferrexpo, when markets crashed two years ago, is back raising cash. According to Millenium Capital, Ferrexpo completed its road-show July 16 planning to place Eurobonds worth $500 million. The company plans to ramp up production by 50% over the next five years, and has the iron ore reserves to do so. ADDENDUM: It appears the Eurobond issue has been postponed.

This follows on the heels of fellow billionaire, Rinat Akhmetov, and the announcement that his steelmaker Metinvest raised $700 million via syndicated loan.

Ukraine has had success recently, negotiating a new $14.9 billion loan program with the IMF. As a result, Fitch upgraded Ukraine’s sovereign bonds stating “The IMF agreement improves the sovereign’s financing flexibility and will unlock additional funds from other international financial institutions.”

There is still a long-way to go — Ukraine’s real GDP fell 15.1% in 2009, according to Fitch, marking the second-worst economic performance after Latvia of the over 100 sovereigns rated by the agency — but billionaire confidence appears to be back up.

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Jul
13
2010

Gold Tussle: Russia vs. Kazakhstan

Plans by the owners of Russia’s top gold producer, Polyus Gold, including Russian billionaires, Mikhail Prokhorov and Suleiman Kerimov, may be thwarted in their efforts to buy Kazakh gold miner KazakhGold Group.

The Kazakh government this week annulled a merger of the two evoking the 2007 Subsoil Law which allows the government to annul any contract involving the use of subsoil resources in the country if it is of national strategic importance the government. The government is reportedly concerned over a low deal price.

If the deal were to go ahead, the merged company – to be called Polyus Gold International Limited - is expected to become one the world’s leading gold mining companies, whose shares will trade on the London Stock Exchange as a single company. (Polyus Gold plans to delist its ADRs from the LSE.)

Event timeline:

*December 2008, Polyus Gold announced first offer for stake in KazakhGold; estimated above $700 million

*April 2009, negotiations announced to adjust offer. In a statement KazakhGold wrote, the “Company’s production levels and working capital levels have deteriorated substantially more rapidly than previously anticipated and KazakhGold requires a funding commitment, in order to continue to operate as a going concern in its current form. Due to these wholly exceptional circumstances, the terms of the Proposed Partial Offer as announced on 29 December 2008 are no longer valid, however, KazakhGold and Polyus Gold remain in active negotiations to agree revised terms in respect of the Proposed Partial Offer.”

The price was adjusted down about 60%.

*July 2009: Polyus Gold, through its indirect wholly-owned subsidiary, Jenington International Inc. (“Jenington”), made a recommended partial offer to acquire 50.1% of the issued and to be issued share capital of KazakhGold. The Partial Offer was declared unconditional on 14 August 2009.

*June 25, 2010:  KazakhGold Group Limited (“KazakhGold”); its wholly-owned subsidiary, KAZAKHALTYN MMC JSC (“Kazakhaltyn”); and Jenington International Inc., a wholly-owned subsidiary of OJSC Polyus Gold (“Jenington”); commenced proceedings in the High Court of Justice (Chancery Division) in London against five members of the Assaubayev family who were former directors of KazakhGold; Gold Lion Holdings Limited (“Gold Lion”) and Hawkinson Capital Inc., (“Hawkinson”). Gold Lion was, prior to completion of the Partial Offer by Jenington to acquire 50.1% of the issued share capital of KazakhGold in August 2009, the principal shareholder of KazakhGold. The defendants include Kanat Assaubayev, who was Executive Chairman of KazakhGold until the completion of the Partial Offer, and Aidar Assaubayev, the former Executive Vice Chairman, who continued as a director until his appointment was terminated on 17 June 2010.

*June 30, 2010, KazakhGold and Polyus Gold, which owns 50.1% in KazakhGold via its subsidiary Jenington International Inc, announced a reverse merger, under which KazakhGold would acquire its parent company Polyus Gold. Under the scheme, one share of Polyus Gold will equal 9.26 Global Depositary Receipts of KazakhGold, and one American Depositary Receipt of Polyus Gold will equal 4.885 GDRs of its subsidiary.

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Jul
08
2010

Ukrainian billionaires behind Privat Group Take on Russian Billionaire Makhmudov

Ukrainian billionaires, Henadiy Boholyubov and Ihor Kolomoyskyy, via Mantara Holding, a company close to the their jointly-owned Privat Group, may be in for a fight over Ukrainian locomotive-maker, Luhanskteplovoz, with Russian billionaire, Iskander Makhmudov.

Mantara Holding filed a lawsuit with the State Property Fund of Ukraine (SPF) to cancel the sale of Luhanskteplovoz to Transmashholding, Russia’s largest maker of locomotives and rail equipment, which is owned in part by Makhmudov.

According to Millenium Capital analysts, Privat “seems to be determined to embark on the protracted litigation proceedings to void the privatization sale results.” Mantara Holding is reportedly willing to pay as much as UAH 600mn (about $77 million) for Lukanskteplovoz compared to the UAH 410mn (about $52 million) paid by Transmashholding. In fact, Transmashholding bid only slightly above the original asking price of UAH 400 million when the tender was held in mid-June for a 76.001% stake in the Ukrainian rail-maker.

In Boholybov and Kolomoyskyy’s corner: Serhiy Tihipko, the Deputy Prime Minister for Economic Affairs, who stepped in this week to express concern over the transparency of the Luhanskteplovoz sale. According to Millenium, this may up their chances of taking back the asset from Russian interests.

Yet another round in Ukraine vs. Russia.

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Jul
07
2010

Luxe travel not set to recover until next year

Global Markets recently interviewed Mark Tamis, COO of Setai Hotels and Resorts, about his expectations for the global travel industry and how Setai, a luxury concept targeting “the world’s most coveted and affluent consumers,” stays on top. An excerpt of the conversation follows:

Global Markets: Let’s talk about the past several years in travel.

Tamis: “Challenging would be an understatement. We felt it coming two years ago but never understood the full magnitute in the decline of travel. The very top of the market was severely affected. At that end, people don’t have to travel or if they travel they can choose scaled down accomodations; so the higher up you are in a category the more affects you will feel.”

Global Markets: Are we seeing a recovery?

Tamis: “Knock on wood we’ve seen the bottom. We’re fairly conservative. 2010 is more about stabilization. 2011 is more of a recovery, 2012 a strong recovery. But it won’t be til 2013 that we see the same numbers in travel that we saw in 2007/2008.”

“For example, Miami is such a Northeast travel market. As Wall Street recovered and confidence returned, we started to see an uptick in the first two quarters of the year. We’re also getting the European and Latin American travellers.” [Setai Group operates The Setai in South Beach, one of the world's most exclusive hotels] Read More »

By admin | Posted in Travel | Tagged , , , | Comments (0)
Jul
05
2010

Billionaire Post Office

I recently read Mrs. Adams in Winter, a wonderful historical biography that took me on a carriage ride from Russia to France along post roads in 1815 (the upkeep of roads was not for individual travel per se but to ensure swift and efficient mail communiques). Not only were the roads she travelled important in ensuring her safety in a resurgent Napoleonic period, but the stations she passed to get fresh horses and rest said a great deal about the wealth and politics of the land.

History yes. But present as well. Prince Albert von Thurn und Taxi, the billionaire German prince whose fortune Forbes estimates at $2.2 billion, has ties back to these post roads. His diversified family fortune can be traced back to being to general postmasters of the Holy Roman Empire and the postal services in Europe in the 16th century.

The horsepower the billionaire postmaster today uses is race cars not equine. The avid racecar driver took delivery of a Chevrolet Corvette ZR1 last year. Nice one for those old post roads.


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Jun
17
2010

Ukrainian Billionaire Akhmetov Tries For Another Steel Mill

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?

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Jun
15
2010

Polish billionaire buys Ukrainian gas firm in middle of Naftogaz debate

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.

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Jun
10
2010

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

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.

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Jun
08
2010

Building Argentina

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.

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