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. Last Updated: 07/27/2016

Kommersant's Wunderkind Owners Debut




Kommersant's new majority shareholder is an obscure U.S. investment fund run by two young men out of a nearly empty office in midtown Manhattan.


Neither Kia Joorabchian, 27, nor Reza Irani-Kermani, 31, speak Russian, and the purchase of an 85 percent stake in the nation's most influential daily newspaper is their British Virgin Islands-registered investment fund's first business foray into this country.


Their company, American Capital, beat out about 18 other bidders - among them arch oil and media tycoon Boris Berezovsky - for the combined shares owned by Kommersant's publisher Vladimir Yakovlev and financial director Boris Kaskov.


Berezovsky, however, was not entirely routed, and apparently now holds the remaining 15 percent stake.


Yakovlev said he chose American Capital because he wanted to keep control of the paper away from Russia's political interests, especially as the election campaigns heat up.


American Capital's two executives, Joorabchian and Irani-Kermani, insisted at a news conference Tuesday in Moscow that they had no political connections in Russia and had bought Kommersant with the sole purpose of making money on it by selling it in several years after a restructuring. They would not comment on reports that they paid $20 million for the shares.


But their insecure performance at that press conference, a lack of public information about their fund and the fly-by-night feel of their Manhattan offices raised suspicions that they could be acting as a front company.


Kommersant editor Raf Shakirov, who also appeared at Tuesday's news conference, made clear that the editorial staff was wary of its new owners.


"We will continue to work as we used to," Shakirov said. "As any editorial team, we will have the possibility to quit [if things change]."


Joorabchian pledged that Kommersant would continue to operate independently, adding that only time can prove his company's honest business intentions. "I understand that you have hesitations," he said. "But I hope that with time we can show with the future investments that we will make - hopefully if the opportunity arises in Russia - we really do believe in the financial return, if you'd like to say, of this particular country."


While Kommersant was carrying more than $10 million in debt, Joorabchian refused to discuss whether Ameican Capital would assume it. He said that 9 percent of Kommersant's shares have been transferred to board members Shakirov and Kaskov, who will continue running the paper for at least a year.


In a telephone interview Tuesday Berezovsky said that he regretted being outbid for Kommersant's controlling stake. "Such are the rules of the market," he said.


But he also said he was still seeking a remaining 15 percent stake owned by Leonid Miloslavsky, the paper's former general director. He said he hoped to use that stake to win a seat on the Kommersant publishing house's board of directors.


And later in the day, Interfax reported that Shakirov, Kommersant's editor, received a telephone call from Berezovsky's associate Badri Patarkatsishvili saying that the purchase of the 15 percent was a done deal.


Berezovsky playfully denied press reports Tuesday that he stood behind American Capital.


"At least I am not aware that it [American Capital] has anything to do with me," he said. "If something different is known to someone else, it would be interesting to me."


He reiterated that Anatoly Chubais, Alfa Group, Moscow Mayor Yury Luzhkov and Gazprom were among his rival bidders for Kommersant. "Everybody understands the importance of this newspaper," Berezovsky said.


In a front-page interview published in Kommersant's Tuesday edition, Yakovlev described the sale to American Capital as a temporary measure that allowed him to escape the pressure of impatient oligarchs demanding that he sell control of Russia's most influential newspaper. Selling to American Capital was a way "to get out of the clinch."


He described the fund as an "independent U.S. company" which is "quite well known on the market" and specializes in investing in emerging markets.


"One could speculate infinitely on whether someone stands behind them," Yakovlev was quoted as saying. "I don't even want to deny this, at some point it becomes simply funny."


Some journalists laughed at the press conference Tuesday when Joorabchian and Irani-Kairani took a defensive attitude to questions about their background and experience on the Russian market. The two new owners lectured journalists on the functions of investment funds, said their staff is "probably" already working on setting up an Internet site for their company (since there was no information about them available on the web) and promised to send out a prospectus of their Virgin Islands-based American Capital Investments, Ltd. and New York-based management company, American Capital (USA), LLC.


Joorabchian said after he emigrated from Iran during the 1989 revolution, he received a B.S. degree from Westfield College in Britain and began his career as an international oil trader before the Gulf War - that is, when he was 19.


American Capital was set up last year and has two branches: one investing in U.S. and European securities and foreign exchange, the other in emerging markets.


Describing the activities of his "high-growth, short-term capital preservation fund," Joorabchian said: "We almost act like a ... boutique investment house because we offer a client, we sit down with them, we discuss their risk-adjusted portfolio, because we want to offer a very direct, specific form, sort of, what's the word for it ... investment to each particular investor to their needs."


A reporter in New York sent by The Moscow Times to visit the American Capital office listed on Joorabchian's business card said he saw a nearly empty office on the top floor of a building under reconstruction on 57th Street in midtown Manhattan. Two secretaries said they had just moved into the office and confirmed they worked for Joorabchian and his partner. They appeared frightened and threatened to call security unless the reporter left.


Independent Media, the parent company of The Moscow Times, was among the publishers whom Yakovlev approached to sell Kommersant, chief executive officer Derk Sauer said Tuesday in a telephone interview.


Sauer said that soon after last year's economic meltdown, he and Yakovlev discussed the possibility of a merger, but they differed too much over the values of their two publishing houses.


Then in late April, Yakovlev proposed selling his majority stake in Kommersant to Independent Media. But the asking price was too high in Sauer's view, and by then Independent Media was moving ahead with plans to launch its own Russian business daily, Vedomosti, in cooperation with the publishers of the Wall Street Journal and the Financial Times.


Sauer said Yakovlev's proposal was complicated by Kommersant's outstanding debts of more than $10 million.


Asked about the feasibility of American Capital turning Kommersant into a profitable business, Sauer said he had his doubts. "If they paid $20 million and did not restructure the debt, it is a very difficult proposition," Sauer said. "I would be very surprised if they make money on this investment."