Maybe that's because, in contrast with the better-known "oligarchs" who acquired massive wealth and notoriety during the privatizations of the 1990s, Abramov, 46, represents a new wave of Russian tycoons who prefer to steer clear of politicians and the Kremlin. Instead of exploiting political connections, he has quietly built a business empire from the ground up, raising its value via canny acquisitions, long-term investments, and sound management. Evraz, which recorded 300% earnings growth last year, is set to go public on the London Stock Exchange in June, raising up to $500 million. Abramov declined to speak to BusinessWeek for this article, citing legal restrictions related to the IPO.
Abramov's low profile also reflects his quiet, academic personality. A graduate of the Moscow Institute of Physics & Technology (MIPT), he began his career as a research physicist, specializing in metals. But with the collapse of research funding in the early 1990s, Abramov and a group of fellow MIPT graduates decided to launch their own business. His scientific work had given him contacts in steel, so Abramov became a metals trader, securing supplies at a time of widespread payment problems. His sharp scientific mind was ideal for tackling the intricacies of Russia's convoluted supply chains.
By the late '90s, Abramov had an opportunity to acquire ownership stakes in two bankrupt steel mills, which became the core of the new EvrazHolding. Years of underinvestment, outdated technology, and poor management had left them crippled with debt. Abramov, a major supplier and therefore a creditor, chose to swap their debt for equity, buying additional debt from other creditors. He appointed new managers and made good on promises to pay taxes and wages. In the following years he reinvested profits to renovate the plants, raised additional money through bond issues, and replaced outdated open-hearth furnaces with modern production technologies. "These are real turnaround companies. They couldn't have been much worse [before Evraz acquired them]," says Timothy McCutcheon, a metals analyst at investment bank Aton Capital in Moscow.RIDING ASIA'S WAVE
Evraz plans to use the proceeds of the IPO on further plant modernizations and acquisitions. It already has debt of $1.3 billion, but with a debt-equity ratio of around 50%, Evraz's balance sheet is still fairly healthy. Of course, Evraz's swelling earnings have been helped mightily by high global metals prices. Around 50% of output is exported, particularly to China and other East Asian markets, where there is strong demand for construction materials. If Asia's boom stutters or steel prices fall sharply from their current peak, Evraz will feel the pinch. Still, according to Maxim Matveev, metals analyst at Russia's Alfa Bank, steel prices would have to dive by 40% to 50% before Evraz would go into the red, an outcome few analysts predict.
Already the world's 12th-largest steelmaker, Evraz is looking at international expansion, eyeing targets in countries including the Czech Republic and South Korea. Abramov's story shows that you don't have to be an oligarch to succeed in Russia. By Jason Bush in Moscow