YOU can ask Alexei Mordashov anything, just don’t suggest he buys your football club.
“Vot is this wiv vootball?” he says in his heavy Russian accent. “When I bought a steel company in Italy, almost on the first day I was approached by the local football team manager. Our speciality is steel. If you want to sell me something in steel or mining, let’s discuss it. But not football.”
He rolls his eyes, puffs out his considerable cheeks, and then smiles. Mordashov, 41, is just having a little fun. He wants to float a chunk of his £10 billion steel empire Severstal on the London Stock Exchange, but is wading knee-deep through European prejudices about Russia and its billionaires.
So let’s get this straight; he’s not a friend of Roman Abramovich and he doesn’t want to buy any football clubs. Nor, he says, is he busy carving out power with a handful of other billionaires in Russia. He just wants to build his steel business. And please don’t call him a Russian oligarch.
“It’s become too much applied. It suggests strong political power and gaining wealth through that power. I’m not an oligarch — not at all. I participated in the privatisation of business in line with the law of the country. I am an entrepreneur. And I’ve never had particularly good access to politicians.”
Sitting in the offices of his new PR adviser in London, Mordashov talks quickly, eloquently, with very good English, words tumbling on top of each other with the same brisk energy that he used to build up his steel business. Across the corridor, in another room, 20 lawyers, bankers and money-men are working flat out on the small print of Severstal’s possible float, waiting for him to come back.
But once he gets going, he is hard to stop. Six feet tall, beefy in build, with a sensible haircut on a still boyish face, he is rated the most entrepreneurial and open of Russia’s billionaires, keen to use his national success as a stepping stone to global greatness.
Fifteen years ago he was a planning economist in the steel town of Cherepovets, 500km north of Moscow, working in the same plant where his parents had jobs. Now his firm Severstal owns that plant and more, and Mordashov — who also has interests in the motor industry, transport and television — is listed among the world’s 100 richest individuals, with wealth of more than £5 billion.
How did it happen so quickly? Like others, he says, he was just in the right place at the right time when businesses were privatised in Russia, and young enough to see possibility where older hands froze in fear. Then he built on the money he made, constantly looking for new opportunities as Russia developed a market economy.
“I like that old Chinese proverb,” he says. “When the caravan turns around, the last camel becomes the first. That’s me. I was last camel at the steel plant and I became the first because of the turnaround.”
He laughs again. Blue-eyed, black-haired and super-bright, Mordashov has a very Anglo-centric sense of humour, quick to be self-deprecating and slow to take offence — hardly the inscrutably buttoned-up billionaire you might imagine.
But his confidence has not always paid dividends. This year an attempt to scupper Lakshmi Mittal’s bid for Arcelor, Europe’s biggest steelmaker, was easily outmanoeuvred. Mordashov offered Severstal as a white knight to Arcelor, but its shareholders queried just how much his Russian steel interests were worth. Hence his enthuasiasm for getting a value by means of a London listing.
“We would like to build the biggest steel company in the world,” he says simply, placing both hands face down on the table. He has a way to go to catch up with Mittal, whose interests are now three times the size of the nearest rival, but a London float would be a start.
Will it happen? “We are seriously considering it. And if we do an IPO, it will be of a substantial amount.”
There has been a lot of untangling to do first, however. Mordashov, like many Russian entrepreneurs, has bought widely in the last decade and mixed his Severstal interests with personal stakes in other ventures.
That doesn't make for clear lines of ownership. When he bought the Italian steel firm Lucchini in 2005, for example, part was paid for and bought by Severstal, the rest was bought by Mordashov personally, though financed by Severstal. It was then sold to Severstal recently at a much higher price.
Too complex? Mordashov brushes away concerns. “Lucchini was a different company at a different time,” he says of the sale of his stake to Severstal. “We had changed it substantially. I had invested a lot of money into it and the price Severstal paid for my share was at the low end of the fairness opinion.”
His non-steel interests, he adds, should be seen as private-equity-type investments. He doesn’t run them, they don’t take up his day-to-day attention. “I am only steel. We have consolidated everything.”
So why keep the interests in automotive and television — to name but two? He grins. “Because it’s very good business.”
His attention in future, he says, will be fully fixed on growing Severstal. If floated in London, the company will have a new chairman, and five independent non-executives on the board, with Mordashov as chief executive and principal deal-spotter.
“We believe the steel market will consolidate, and consolidation offers optimisation of costs and economies of scale. With our strengths we see a lot of opportunities to participate in this consolidation.”
Is Corus, the Anglo-Dutch steel firm, on his shopping list? Press speculation suggests it could soon be targeted by India’s Tata group. He smiles. “We are ready to do big deals or small deals, mergers or acquisitions, with cash or paper, but I wouldn’t like to name names. We would definitely like to grow, though.”
And what about the politics in Russia? It was reported recently that Mordashov sacked a woman newsreader at his television station for criticising President Vladimir Putin. Does big business have to stay in thrall to the government? Mordashov gestures in exasperation. “The TV announcer was fired by the chief executive — it was a conflict between two people. It’s nothing to do with me. I am just a shareholder. I don’t interfere." And what of the belief that Putin will soon force Russian steel firms to merge, creating a national champion? Mordashov shakes his head. “Russia is a free-market economy and we have laws. Steel is privatised and nobody but shareholders can decide what is going to happen. Maybe there are indications that the government would like to see national champions created, but I don't feel any pressure.
“And may I make one more point? An independent chairman and five non-executive directors will represent the interests of all shareholders, and this corporate governance will provide protection against any inappropriate moves by major shareholders or government.”
Others who have worked with Mordashov say he takes governance seriously, and is obsessed with modern management methods. He is also well-schooled in western ways — he took an MBA at Newcastle Business School by correspondence course in the late 1990s.
“He is one of the most corporately responsible business leaders I have come across in Russia,” says Professor Andrew Kakabadse of Cranfield Business School, which recently received a £2m grant from Mordashov to study board governance.
Kakabadse, a long-time adviser to Mordashov, compares the young Russian’s style to a mix of the late Lord (Arnold) Weinstock and Sir Adrian Cadbury — all-round skills, driving ambition, but with a feel for people and an eye to how things should be done. “He’s a numbers man but he reads people very well too, and he’s still got his feet on the ground.”
Mordashov is also rooted in the town where he grew up. Severstal provides more than 50% of the employment in Cherepovets, a town where rivers and rail lines cross, which made it a good place for Lenin’s central planners to create a steel industry.
Mordashov grew up an only child in the pre-glasnost era. His father was an electrician and his mother worked for the maintenance department at the plant.
He, however, always wanted to be an economist.
Later, after studying economics in St Petersburg, he returned to a planning job at the steel plant. Then a study trip to Austria opened his eyes to how different things were in the West.
“It was a shocking experience. I grew up thinking the Soviet system was the best system. We didn’t have capitalism, we didn't have exploitation, and all the negative elements were just one-off because of war or whatever.
“So we had coupons for food in my childhood — 400g of sausages a month for the family, 200g of butter. But eventually we understood that it was not down to one-off events, it was the system that was not right.”
So when Soviet-style communism was dismantled, he was ready to take advantage. “I became finance director then chief executive at the plant.” He had already set up a trading company outside the works. When shares in the plant were issued to workers, he bought them up. They had little value, as the plant was unprofitable, and older workers didn’t want to hold them. They were too worried the Soviet regime would return.
Now Mordashov virtually runs the town — Severstal owns the local ice hockey team, too, so perhaps he shouldn’t be too surprised at the football-club questions. But he is still, compared with some of Russia’s billionaires, accessible to workers and journalists alike. He doesn’t surround himself with goons or have a lavish playboy lifestyle. He even buys his suits off the peg.
But he knows investors will worry about Severstal’s distance from London, and the complexity of his business interests, and he promises that all will be made plain.
“It’s fair that you demand transparency from me,” he sums up. “I've nothing to hide. I’ve made mistakes but they are very well-known — like Arcelor.”
What else? “You don’t know any? Then forget it.” And he laughs. He certainly has charisma. But can he stick just to steel? That might be a question to ask, if I were an investor.
Vital statistics
Born: September 26, 1965
Marital status: divorced, with three children
School: school No 12, Cherepovets
University: St Petersburg, and MBA from Northumbria
First job: planning economist
Salary package: undisclosed, estimated wealth £5 billion
Homes: Moscow and Cherepovets
Car: blue Porsche Cayenne
Favourite author: Marina Tsvetaeva
Music: ‘anything classical’
Favourite film: Solaris, directed by Andrei Tarkovsky
Favourite gadget: I-mate
Last holiday: Crimea
Alexei Mordashov's working day
THE Severstal boss wakes at his house in Moscow before 9am and is at his desk an hour later. The company keeps a small base in Moscow, with a bigger head office in Cherepovets.
He usually goes straight into meetings, often with one of the 14 key managers who report directly to him. “The role of chief executive at my level should not be operational,” says Alexei Mordashov. “My job is to select, develop and motivate people, and to set up strategy, or at least facilitate the process of development of strategy. And, thirdly, control.”
How controlling is he? “We have 160,000 people in Russia and 6,000 outside,” he says. “It’s impossible to control everything. That’s why I have so many reporting to me. But I never interfere directly. If I did, I would undermine managers’ motivation.”
Mordashov often works until 10pm or later. He tries not to eat in the evening. “As you can see, I need to control my weight,” he says.
Downtime
ALEXEI MORDASHOV relaxes by working out in his gym at home or walking in the forests around Cherepovets. “I like the area of the country where I’m from,” he says. “We use the Ski-Doo (snowmobile) in winter in the forests, and quadbikes in the summer.”
Divorced, he now lives with another woman. “I’ve not married again because I hope it’s improved my relationship.” Mordashov has three children whom he tries to see every weekend.
He says he can’t think what else he spends his money on outside work. Nearly all his time is taken up with business. “Right from my early childhood I always wanted to be an economist. I thought it must be the most important job in the country. We had all the other elements in place, and just needed to shape the national economy to get results.
“My parents were a bit surprised. They said, why choose that? You should become an engineer or a doctor, something more esteemed.”
