There wasn't enough room for two oligarchs at Norilsk Nickel. But three might just fit.
The Russian nickel and palladium miner is selling a 7.3 per cent stake to Roman Abramovich in a deal intended to resolve a spat between the group's two biggest shareholders, Vladimir Potanin and Oleg Deripaska. There's something in the deal for everyone, but for Abramovich especially.
The Russian tycoon-turned-football-magnate's entry onto the scene should defuse long-runing tensions over strategy and governance. Potanin, who owns 28 per cent of the company, gets to be chief executive, while Deripaska, whose RUSAL aluminium group bought a 25 per cent just before the 2008 crash, benefits from a three-year pact assuring dividend payments.
Deripaska may find Potanin's elevation hard to swallow, but he wasn't a supporter of the incumbent, Vladimir Strzhalkovsky, either. And it's a price worth paying for an agreement that otherwise gives the two oligarchs equal board representation and sees a range of lawsuits and arbitration proceedings dropped.
The question is what's in it for Abramovich. It's not clear what price he is paying for his stake. But the obvious bonus is that he gets voting rights over approximately 22 per cent of Norilsk shares, three times his economic interest, the extra votes detached in equal measure from Potanin's and Deripaska's holdings.
It's a highly unusual deal. Abramovich has outsized voting influence plus three board seats (versus four each for the existing oligarchs), and essentially holds the balance of power. The shares currently trade at a 50 per cent discount to Russian mining peers on forward earnings. The slight rise in Norilsk's share price suggests the arrangement could unlock some governance discount. For minority shareholders, it is far from clear how the new governance dynamic will play out. The market reaction is best read as saying this at least can't be worse than what came before.