“Interros” History

Foreign trade operations
The first stage in the history of the «Interros» group began after the government monopoly on foreign trade was abolished, which gave private businesses an opportunity to engage in foreign trade operations independently. For this purpose, an «Interros» foreign trade association was founded in March 1990. The company focused on financial consulting and foreign trade transactions support.

Finance and banking
In 1992, having evaluated the development prospects of the financial market during the transition period, «Interros» founded the International Financial Company (MFK) bank. The growth in the number and volume of the foreign trade transactions, in which «Interros» participated naturally, raised the question of setting up a specialized organization for financing such operations. These functions were assumed by the United Export and Import Bank (UNEXIMBANK), founded in early 1993. This large private bank provided financial services to the biggest companies, competed with the government-owned banks and actively promoted demonopolization of the banking sector.

Investments in industrial assets
In 1994, the successful expansion of «Interros» operations led to the establishment of a financial and industrial group that focused mainly on industrial assets acquisition and efficient management.

The most remarkable operations of that time included the acquisition of blocks of shares in Norilsk Nickel, the Sidanko oil company, the Novolipetsk metallurgical combine, the Svyazinvest company and the North-Western Shipping Line.

Expansion of the industrial arm called for changes to the business strategy of the entire group. Organizationally, this resulted in the establishment, in April 1998, of the «Interros» company, which was to structure all the assets of the group according to world standards. The company’s functions included management of the assets owned by the «Interros» group, corporate restructuring, anticrisis management, investment strategy development, financial control and personnel training. The transition to the new strategy may be viewed as the starting point in the formation of «Interros» as an investment fund. This process was suspended, however, by the financial crisis of 1998.

Business restructuring
In 1999, after the crisis, the market value of the companies managed by «Interros» was US$1,360 million. In order to overcome the consequences of the 1998 crisis, the priority was to reach agreement with creditors on UNEXIMBANK debt rescheduling. To avoid bankruptcy, the shareholders provided the bank with the funds that were used to repay the restructured debts and issue bonds. The result of the final agreement with the creditors was the first and so far only effective restructuring of bank liabilities in the recent history of the Russian banking sector. «Interros»’ next step was to merge UNEXIMBANK and Rosbank, which was founded in 1998.

In a follow-up to the policy adopted before the 1998 crisis, «Interros» also restructured its own biggest industrial asset, RAO Norilsk Nickel. To enhance the company’s transparency and raise its market value, the focus of capitalization was shifted onto the fixed productive assets. The shares of the old company were exchanged for those of the new one. As a result, shares of the Norilsk Nickel mining and metallurgical company (MMC) were listed on the stock market while the capitalization and degree of transparency of MMC operations increased.

In parallel with the restructuring of its companies, «Interros» began to sell its noncore assets and look for opportunities to advance along the new line of business. The holding company sold its blocks of shares in Sidanko and Svyazinvest, MIC facilities, Perm Motors, and the Novolipetsk metallurgical combine.

New lines of business emerged in power engineering, the media, agribusiness, and real estate.

«Interros» thus achieved a marked increase in the value of the assets under its management.

The current stage of development
In the beginning of the 2000-s «Interros» had to seek new forms of activity in order to increase the business efficiency and improve its position on the market. Transforming «Interros» into a biggest private investment company in Russia became the priority task. The maximization of the assets portfolio value, a meticulous selection of the sectors to invest, the use of the most efficient organizational and administrative methods became the major activity principles of the company.

The relationships between «Interros» and its affiliated companies rely on the most advanced corporate governance practices.

The role of «Interros» is to determine the strategy and to monitor the company’s activities. «Interros» top managers sit on Boards of Directors of all affiliated companies thus monitoring the asset, assessing the efficiency of an affiliated company within the framework of «Interros» tasks and goals, its potential to be sold to another interested investor. Practically all companies, comprising «Interros» structure, are targeted entering the stock market, thus becaming public and open for investors. «Interros» welcomes independent directors to sit on the BoDs of the affiliated companies in order to benefit from their experience, market knowledge and original ideas in business development.

«Interros» operates as a strategic investor, purchasing shares of companies and entering only those markets, where there is a real chance to win leading positions.

The characteristic feature of the Company’s development today is the investment activity of «Interros», which invests free capital into new perspective spheres, which are important from the national economy interests point of view. Among such spheres one may mention electric power engineering, housing and communal services, innovational economy based on hydrogen technologies. Early in 2006 «Interros» started its own mining project on exploration and production of solid natural recourses and mineral raw materials. However by the end of the year it was decided that «Interros» would not develop the mining business as its global priority on its own. The reason was to evade a possibility of conflict of interests with its own assets, i.e. the «Norilsk Nickel» and «Polyus Gold» public companies. They purchased the assets owned by «Interros» during this period.

In 2006, «Interros» exited business in housing and communal services but proved that this sphere provides basis for business and it can be technologically managed. «Interros» top-managers believe that the future of this branch of economy depends on major strategists, professionals and managers of communal services in different parts of the country. Generally speaking, 2006 became a real success for «Interros»: each significant project of the company proved to be able to enter the new stage of development and to acquire new higher quality. Early in 2007 the «Interros» company owners Vladimir Potanin and Mikhail Prokhorov announced the division of business. As a result of its restructuring the «Interros» managing company remains the property of Vladimir Potanin, while Mikhail Prokhorov should quit from its shareholders and establish his own managing company.

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