If a magic genie ever offers you the ability to switch lives with one other person on the planet, you definitely wouldn’t regret Quantum-leaping into the life of billionaire Mikhail Prokhorov. You probably know Mikhail for being the former owner of the NBA’s Brooklyn Nets. He bought the Nets for $223 million in 2013, famously with Jay-Z (who owned less than 1% of the team), and sold it in 2019 for $3.5 billion.
But, obviously, being a former NBA team owner is not the reason you should want to switch lives with Mikhail Provhorov. Over the last 15ish years Mikhail has built a dream life that includes super model girlfriends, mansions around the world, mega-yachts, an ultra-luxurious private jet and even a semi-successful political career. He is essentially, the ultimate billionaire playboy. Bruce Wayne times 10. However! Unlike your standard multi-billionaire, including Bruce Wayne, the majority of Mikhail Prokhorov’s $13.5 billion net worth is made up of…
And he didn’t plan for that to be the case. In fact, Mikhail owes almost his entire cash-liquid bank account and lifestyle to a private jet full of prostitutes and a debaucherous New Years party in 2007 that landed him in a French jail…
(Unrelated Victoria’s Secret Models via Getty)
Mikhail Prokhorov’s business career dates back to 1989 when he graduated from the Moscow Finance Institute. He spent the next three years rising to the top of a handful of Russian banks, ultimately peaking as the President of United Export-Import Bank (also known as Onexim Bank). While running Onexim Bank, Prokhorov was introduced to his future business partner Vladimir Potanin.
Vladimir Potanin had spent the previous 10 years working in the Soviet Union’s Ministry of Foreign trade where he cultivated many close friendships within the Kremlin and around Moscow. As Communism fell apart, Potanin quickly gave up his position at the Ministry of Foreign Trade and became one of the first private citizens to earn the right to open a private bank. Together, with Potanin’s government connections and Prokhorov’s experience in finance, they were uniquely positioned to make a huge fortune.
In 1995, the Russian government announced that it was auctioning off one of their most valuable state-owned assets, a mining conglomerate called Norilsk Nickel. At the time Norilsk Nickel produced 25% of the world’s nickel and was earning $400 million a year in revenues. Using a basic 10X revenue valuation method, the bare minimum value of Norilsk Nickel should have been $4 billion.
So you might be surprised to learn that the auction’s starting price was set at just $170 million. Even more surprisingly, Mikhail Prokhorov’s own Onexim Bank was chosen to administer the auction and collect bids.
The auction received just two bids. The highest bid was a $355 million offer from a group called Rossiiski Kredit Bank. The lowest bid was a $170.1 million offer from the group controlled by Prokhorov and Potanin.
Incredibly, Onexim Bank – WHICH WAS CONTROLLED BY PROKHOROV – disqualified the higher bid right out of the gate, claiming that Rossiiski Kredit Bank’s offer exceeded their credit.
Who did that leave as the sole remaining bidder? Well wouldn’t you know… it was Mikhail Prokhorov and Vladimir Potnanin! By complete and total sheer luck, Prokhorov and Potanin were the winning bidders of one of the most valuable state owned Russian companies in the world with a bid that was just $100,000 higher than the reserve price.
(Photo by Oleg Nikishin/Epsilon/Getty Images)
Over the next 10 years, Norilsk Nickel expanded at a furious pace. Under Prokhorov’s direction, the company sold off all non-core assets, modernized equipment and aggressively sought out new regions with natural resources to exploit. Annual revenues at Norilsk Nickel grew from $400 million in 1995 to over $10 billion in 2007. Profits rose from $60 million per year to over $1.5 billion.
When the company went public, Mikhail and Vladimir instantly became multi-billionaires. As the price of commodities around the world sky rocketed, so did the value of Norilsk Nickel thrusting Mikhail and Vladimir into the upper echelons of Russian wealth and power. So why did Mikhail Prokhorov sell all of his shares just as the company was surging? That’s where the private jet full of Russian prostitutes comes in.
New Years 2007
In January 2007, Mikhail Prokhorov and a group of close friends hopped aboard his private jet and flew to the upscale French resort town of Courchevel, high up in the Alps to celebrate the Russian Orthodox New Year. Also allegedly on board that flight? According to French police:
12 “young and leggy” Russian prostitutes.
After a debaucherous three-day party at an upscale hotel that was described as a “massive orgy,” 50 French police officers swooped in and arrested Mikhail, four of his staff members and a dozen “models”. The police raid also uncovered $64,000 in cash.
According to Prokhorov, the women were nothing more than “models” who were flown-in for “entertainment.” According to the Associated Press at the time, the women were paid to provide company to Mikhail and his friends in exchange for goods purchased at local luxury boutiques. Investigators alleged that the women were not full-time prostitutes, but only worked “occasionally as prostitutes” and were flown in from Russia by billionaires like Mikhail around the holidays.
CHRISTOPHE MAGNENET/AFP/Getty Images
Forced To Liquidate
Around the time of his arrest, Norilsk Nickel’s stock price was at an all time high. The scandal made enormous waves back in Russia. Perhaps sensing an opportunity, Vladimir Potanin saw the scandal as the perfect opportunity to push his old business partner out to pasture.
Over the next 12 months, both parties fought bitterly over the future of Norilsk Nickel. In the end, the pressure was just too much for Prokhorov and he was forced to liquidate 100% of his holdings in the company. He ended up selling his stake to Oleg Deripaska, who at the time was the richest person in Russia with a net worth of $28 billion. The final sale price for Mikhail’s stake?
$7 billion in cash + $3 billion worth of stock in one of Oleg’s aluminum mining companies.
Between 2008 and 2010, Mikhail received at least $12 billion in cash liquidating various assets according to the terms he met with Potanin.
As it turned out, the timing of his sale could not have been any better for Mikhail Prokhorov.
In October 2008, just a few months after Mikhail cashed out, the world economy collapsed. As stocks plummeted, the global commodities market was eviscerated. Oleg Deripaska’s net worth plunged 85% from $28 billion to $4 billion in a matter of months. Today he is worth $2 billion.
In the wake of the collapse, Vladimir Potanin’s fortune dropped from a previous high of $9 billion to around $1.5 billion. Don’t shed too many tears for Potanin. His fortune roared back after about a decade. Today he is worth around $30 billion and is widely considered the richest person in Russia (if you exclude Vladimir Putin).
But for a few years, Mikhail Prokhorov found himself sitting alone atop the list of the richest people in Russia. Perhaps most importantly of all, Mikhail’s distance from the Russian business world in the last year has likely allowed him to avoid much of the scrutiny and sanctions that have befallen his fellow Russian oligarchs. Vladimir Potanin may have $30 billion, but he is currently sanctioned by the United States, Australia, Canada and the United Kingdom. It’s even worse for Oleg Deripaska. He is currently sanctioned by the US, UK, European Union, Canada, Australia and Switzerland.
Guess who isn’t sanctioned anywhere….?
He’s no longer the richest person in Russia, but his very-liquid $13.5 billion sanction-free fortune probably makes him the happiest oligarch in history! And to think, none of his circumstances would exist today without the help of a private jet full of high-end Russian models/prostitutes!
Read more: How A Private Jet Full Of Prostitutes Earned Mikhail Prokhorov $10 Billion
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