Mystery Russian Billions Update

It’s obviously Mysterious Russian Billions day today. Not only do we have the

shady Oleg Deripaska paying $1.54

billion for a 15% stake in Magna, a Canadian auto supplier, but we also

have the even shadier Prana, whatever or whoever that might

be, paying $3.9

billion for a shabby 22-story building in Moscow and a few other assets

of dubious value.

In the case of Deripaska, the Wall Street Journal hints at possible national-security

implications, since the Russian oligarch has been denied a visa to enter the

US and will now presumably be part of Magna’s bid for Chrysler. Says the article,


Though owned by a German parent, Chrysler is still considered a U.S. company

in that it continues to design, develop and manufacture cars and trucks in

North America and employs about 80,000 people here. If Chrysler does work

for the Defense Department, or has operations that are deemed of national-security

interest, the deal could be subject to review by the Committee on Foreign

Investment in the U.S.

I have no idea what this is talking about – I’m pretty sure that the

PT Cruiser isn’t

in fact part of a top-secret plan to take over the world by means of retro styling.

But in any case, the Prana deal, for the old Yukos headquarters, is even more

mysterious: the company got into a massive bidding war with Rosneft (707 bids

and counterbids in all) for an asset which doesn’t seem to be worth anything

near its final price.

"We considered the lot interesting and we went as far as we were prepared

to go," said Rosneft spokesman Nikolai Manvelov, without explaining why

it was worth almost $4 billion.

The bidding amounts appeared unjustified by the value of the 22-story Moscow

headquarters building and several other buildings in the city center.

"In the investment sales market, the largest sales of office buildings

have been around $120 to $140 million. This is off the scale," said Christopher

Peters, head of research in Moscow at real estate firm Cushman & Wakefield

Stiles & Riabokobylko.

Some observers of the auction said it was possible the bidders knew about

hidden value in another asset in the lot.

I smell the plot for a spy novel here. But in any case, this is Russian capitalism

for you. Money? Yes, lots. Transparency? Not so much.

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