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. Last Updated: 07/27/2016

Prokhorov Planning $17Bln Fund

ReutersSergei KarpukhinProkhorov listening to a question during a news conference on Thursday.
Mikhail Prokhorov on Thursday announced plans to form a giant $17 billion investment fund, Onexim, from his assets in Norilsk Nickel, Interros and Polyus that would branch out into areas as diverse as hydrogen fuel cell technology and nanotechnology.

The fund will focus on "innovatory projects in the fields of hydrogen fuel cell technology, nanotechnology and mining and metals ... in which Russia has objective competitive advantages," Prokhorov told a news conference.

"We have a very ambitious task before us -- to build one of the world's biggest investment funds."

The fund would grow to more than $30 billion within the next three to five years, Prokhorov said.

Prokhorov stepped down as CEO of Norilsk Nickel in March under an agreement with longtime business partner Vladimir Potanin to divide the business empire they control through their Interros holding company.

Prokhorov said his assets from the split with Potanin --his 22 percent stake in Norilsk Nickel, 50 percent in Interros holding and 22 percent in Polyus Gold -- would go into the new fund.

Prokhorov and Potanin were placed joint fourth and fifth in the Forbes rich list published in March. The magazine estimated each man's fortune at $13.5 billion.

The fund will come under the aegis of a newly created Onexim Group, to be headed by Prokhorov.

Prokhorov said Thursday that he picked former Norilsk Nickel executive Dmitry Razumov as the fund's general director. Razumov was Norilsk deputy CEO for corporate development, mergers and acquisitions from 2001 to 2005.

Prokhorov also signaled his intention to be a major player in the research into nanotechnology, an area that President Vladimir Putin has backed as a key new ventures to diversify the country's economy away from natural resources.

Onexim Group would put hundreds of millions of dollars into nanotechnology over the next three years, Prokhorov said.

"Nanotechnology is essentially a government initiative which we support and intend to fund," he said.

Prokhorov said his 50-50 assets split with Potanin would be completed by the end of the year, after which he would decide whether to keep or dispose of the assets.

Prokhorov declined to say whether he would sell his shares in Norilsk, stating only that his main interest was in energy.

"All I can say is that I'm extremely interested in energy. The parties will resolve this issue following the asset split," he said.

Prokhorov was widely expected to head up a $7 billion electricity company called Norilsk Power, which Norilsk Nickel plans to spin off this year.

"We shall aspire to control up to 10 percent of the Russian traditional energy market in future," Prokhorov said Thursday.

Prokhorov was the only Norilsk board member to vote against the company's improved $6.4 billion bid for Canadian miner LionOre. On Thursday, Prokhorov described the new bid as "too risky," given the possibility of a fall in currently high nickel prices.

"LionOre is a great company and Norilsk started looking at it while I was still in charge, but the price offered is too high," Prokhorov said.

Norilsk's new CEO, Denis Morozov, said in an interview in Vedomosti on Thursday that he did not see the price of nickel tumbling in future, given a current annual surge in demand of 5 percent to 6 percent.

Razumov said Onexim would "invest in companies with multiple growth potential, with price tags costing upward of $1 billion."

"Regardless of the size of our stake in an asset, we will be managing it through the board of directors," Razumov said. "We won't be involved in day-to-day management."

Razumov also said that in its asset acquisition drive, the group would cast a wide net geographically, and would expand business, especially in the BRIC countries. "We want to build new generating capacity in those countries," he said.