Roman Abramovich, Russia’s richest man, is set to play a major role in reshaping the country’s steel sector after agreeing to buy a 41% stake in Evraz Group, Russia’s largest steel maker by volume.
Millhouse LLC, Abramovich’s investment vehicle, said on Monday it would pay a market price for the stake in Evraz in a deal analysts valued at more than $3-billion.
“The arrival of Abramovich may ultimately mean Evraz follows the corporate development model of Sibneft, implying high operating efficiency and large dividends,” Vladimir Katunin, analyst at Aton brokerage, said in a research note.
Abramovich, owner of English football champions Chelsea, sold his stake in oil company Sibneft to state gas monopoly Gazprom last year. His $18,2-billion fortune ranked him the world’s 11th-richest man in a recent Forbes magazine list.
Millhouse Chairman Eugene Shvidler said in a statement the company saw good prospects in the steel sector and expected significant growth in the value of the asset it had acquired.
Analysts said they expected Evraz, which already groups three large Russian steel plants with iron ore and coal mines, to drive further consolidation in Russia’s steel sector.
This process gained momentum last month when Severstal owner Alexei Mordashov agreed to sell his assets to Arcelor in a deal giving him about one third of an enlarged company that would be the world’s largest steel maker.
“Perhaps Evraz will be used as an instrument for further consolidation of the Russian industry,” MDM Bank metals and mining analyst Michael Kavanagh said.
Evraz Group produced 13,85-million tonnes of crude steel last year. It owns the Nizhny Tagil, Zapsib and Novokuznetsk plants and posted net profit of $905-million in 2005.