German Khan

German B. Khan
Native name Герман Борисович Хан
Born German Borisovich Khan
24 October 1961 (1961-10-24) (age 55)
Kiev, Ukraine, USSR
Residence London and Moscow
Citizenship Ukrainian, Russian, Israeli[1]
Alma mater Moscow Institute of Steel and Alloys
Occupation Entrepreneur, business executive, philanthropist
Known for Co-founding Alfa Group, LetterOne, and L1 Energy
Net worth US$9.5 billion (2016)[2]
Website Khan's profile at LetterOne

German Khan (Russian: Герман Борисович Хан; born 24 October 1961) is a Ukrainian-Russian entrepreneur, business executive, and philanthropist.[3][4] After graduating from university in 1988 he worked in a wholesale business selling consumer items,[5][5] before setting up his own cooperative.[1] He was then appointed the head of the wholesale trade business Alfa Eco as part of a wider company, Alfa Group Consortium, by Mikhail Fridman.[5][5][6] He became president of Alfa Eco in 1996[7] and was instrumental in directing the company to focus on the export business and the oil trade.[1] When Alfa bought Tyumen Oil (TNK) in 1997, he joined the board of directors.[1] He served as deputy chairman of TNK Oil Company[8] from 1997 until 2003.[5] In 2003, Khan worked with the other TNK owners to form a 50-50 joint venture with British Petroleum (BP),[9] in what was the biggest foreign investment in Russia to date[10] at USD $8 billion.[11]

TNK-BP became Russia’s third largest oil company.[5] In 2013 TNK-BP was sold to Rosneft[12] for USD $56 billion,[13] a sale described by Reuters as "one of the biggest energy takeovers in history."[14] Khan joined Mikhail Fridman in establishing LetterOne, based in Luxembourg, for the purpose of investing proceeds of the proceeds from the TNK-BP sale in international projects.[15][16][17] LetterOne's L1 Energy fund was founded in 2013.[7][18] Khan has donated funds to non-profits such as the European Jewish Fund,[19] and co-founded and supports the Genesis Philanthropy Group.[20]

Early life and education

German Borisovich Khan was born on 24 October 1961 in Kiev, Ukraine.[5] The son of Ukrainian Jewish parents from Lviv,[21] his father was a metallurgy professor.[5] Khan had a keen interest in sports at a young age, and during high school he developed a long-term interest in boxing,[1][5] citing the sport as an influence on building confidence and self-discipline.[22] Khan graduated from high school in 1978 and subsequently worked for a year as an apprentice on a shop floor of a factory. He then studied mechanical engineering[1] at the Kiev-Pedagogical College, graduating in 1982.[23] 1983 he enrolled in the Moscow Institute of Steel and Alloys (MISIS),[5] where he specialised in the study of steel production.[1][21] After graduating from college in 1988, Khan operated small businesses[5] such as the clothing cooperative "Alexandrina" he founded with a partner, where he served as deputy chairman and handled supply chain and sales before its sale in 1990.[1]

Career

Alfa-Eco and TNK (1989-1990s)

See also: Alfa Group

After a chance meeting with businessman Mikhail Fridman,[1] who had also been a student at MISIS,[1] Khan was asked to head-up a wholesale trade business Alfa Eco as part of a wider company, Alfa Group Consortium.[5][6] The company began by buying and selling a range of products[6][12] including the purchase, upholstery and sale of carpets[6] to domestic and then later, export markets.[12] Khan took on a number of managerial positions within the company as it expanded into new areas.[7] Currently under the umbrella company Alfa Group Consortium,[24] other divisions now include Alfa Capital Management, Rosvodokanal Group, AlfaStrakhovanie Group and A1 Group.[6]

Khan held a number of different managerial positions at Alfa Group starting in 1992. With Alfa-Eco restructured as the trading arm of the Alfa Group, Khan was Alfa-Eco's head of trade operations until 1996[7] and Alfa-Eco's director of commodity trading from 1995 to 1998.[24] He became president of Alfa Eco in 1996, where for his two-year tenure[7] he was instrumental in directing the company to focus on the export business and the oil trade. The company started by purchasing crude, securing contracts with refiners to process it, and then selling the refined product.[1] In 1997, Alfa Group Consortium together with Access Industries and Renova Group[12] acquired the state-owned TNK Oil Company[8] (Tyumen Oil Company).[24] Alfa Group purchased 40% of TNK's shares.[5] When Alfa bought Tyumen Oil (TNK), he joined the board and remained involved in M&A deals.[1] Khan was appointed deputy chairman of the management board of TNK Oil Company in 2000,[7] retaining the role until 2003.[24]

TNK-BP leadership (2003-2013)

See also: TNK-BP

In 2003, Alfa Group sold exactly half of TNK to British Petroleum (BP) for USD $6.15 billion,[9] in what was the biggest foreign investment in Russia to date[10] equaling $8 billion in invested assets.[11] The deal resulted in the formation of the oil company TNK-BP,[5] with half of the joint venture owned by BP, and the other 50 percent owned by the Alfa Group together with billionaire partners Viktor Vekselberg, and Leonard Blavatnik.[14] From 2003 to 2013,[4] Khan was executive director of TNK-BP Management[5] (now called TNK-BP Holding),[5][7] and a member of the management board.[4][25][26] While managing TNK-BP, Khan remained involved with the Alfa Group at large. Alfa Group bought a stake in Turkcell in 2005, and by April 2007, Alfa Group controlled a 43.5 percent stake in Kyivstar, a Ukrainian telecom company.[27]

During Khan's tenure as TNK-BP executive director,[26] TNK-BP became Russia’s third largest oil company and globally a top ten private oil producer.[5] Without a majority stakeholder in the company to dictate choices, by 2008, BP executives were in conflict with AAR over TNK-BP's strategy to internationalise the business.[28] After several ongoing lawsuits, issues between AAR and BP were compounded in 2010, after Khan and Fridman resisted BP's push to do business with the state-owned oil company Rosneft in Russia,[14] contrary to their shareholder agreement.[29] By 2011, Khan's net worth was estimated at $9.6 billion, which placed him at 92 on the Forbes billionaires list, also ranking him as the thirteenth wealthiest person in Russia.[25] Khan was appointed executive director of TNK-BP Ltd. in January 2011.[7]

Founding LetterOne and L1 Energy (2013-2015)

See also: LetterOne
German Khan and L1 Energy colleague Lord Browne in 2016.

In July 2012, TNK-BP was sold to the state-owned Rosneft[12] for USD $56 billion,[13] a process which was still underway by early 2013.[14] Reuters described it as "one of the biggest energy takeovers in history," with the overall deal worth $55 billion.[14] Khan officially left TNK-BP in March 2013 after Alfa Group sold its 50% stake in TNK-BP to Rosneft for $28 billion.[18][30] Khan earned around $3.3 billion in the deal.[31][32] Using the USD $14 billion raised from selling their stakes in TNK-BP, Khan joined Mickhail Fridman[16][17] in establishing LetterOne (L1),[18][30][33] based in Luxembourg,[15] for the purpose of investing the proceeds from the sale of TNK-BP in international projects.[13][15]

LetterOne's L1 Energy was founded in 2013 with[18] Lord Browne, former CEO of BP,[34] James Hackett of Anadarko Petroleum and Andrew Gould of BG joining L1 Energy Advisory Board.[34] The 2014 downturn in the oil industry and the falling ruble value in Russia led to Khan losing about 22% of his estimated value in 2014, or about $2.5 billion in one year.[32] By that point, his overall value was estimated at £6.3 billion.[35] The market afterwards improved, and Alfa Group's assets equaled around $40 billion by March 2015.[36] On 2 March 2015 Lord Browne was appointed chairman of L1 Energy.[37] L1 Energy officially launched as a company[7] in May 2015 in New York’s Neue Galerie. The company outlined an ambition to acquire and then develop a portfolio of two or three regionally focused platforms around the world.[17] On 7 May 2015 Lord Davies was appointed deputy non-executive chairman of LetterOne,[38] and a week later, former Swedish Foreign Minister Carl Bildt was appointed as the board's advisor.[39]

North Sea assets, L1 divisions (2015-2016)

On 3 March 2015, L1 Energy purchased 100% of DEA,[40] an international exploration and production company[36] owned by the German utility RWE, for USD $7 billion[37] (€5.1 billion).[40] RWE DEA had total natural gas production output of 2.6bn cubic metres in 2013.[41] The deal was approved by Germany[36] and seven other national and supranational authorities, including the European Union and Ukraine.[37] Despite this, the L1 purchase of RWE DEA was opposed by UK Energy and Climate Change Secretary Ed Davey, who "raised concerns" that sanctions[36] might "force L1 Energy to shut down production in the North Sea, imperiling oil supplies"[42] and 5% of Britain's North Sea natural gas output.[43]

DEA sold its North Sea oil fields[44] to Ineos, the chemical company owned by Jim Ratcliffe, for an undisclosed sum in October 2015.[45] At the time, the British government assured LetterOne that the forced sale of DEA's UK assets was "not a judgement on the suitability of LetterOne’s owners to control these or any other assets in the UK."[46][47] On 14 October 2015, LetterOne Group announced that it had agreed a deal to acquire German utility E.ON’s interests in three producing Norwegian fields, all located in the Norwegian Continental Shelf. Norway’s oil minister supported the deal and said that approval would be handled "in the usual way."[48] As of 2016, Khan retains positions on the supervisory board at both Alfa Group Consortium[4] and Alfa Group.[7][24] He is also a director at Alfa Finance Holdings SA,[24] Alfa Bank[7] ABH Holdings S.A.,[7][24] LetterOne Holdings S.A.,[7] and the supervisory board of[4] DEA Deutsche Erdoel AG.[49] He ranked as the 128th richest person in Europe as of March 2016, with an estimated net value of USD $8.7 billion.[50]

Philanthropy

German Khan (in forefront) at the commemoration of the Babi Yar Holocaust Memorial Center at Babi Yar in Ukraine in 2016.[51]

German Khan is an active supporter of the Life Line charitable programme, which provides medicine and surgery for seriously ill children in Russia. Since its founding in 2008, the program claims that 8334 children have been saved as a result of their work.[52] Khan is also known as a supporter of Jewish initiatives in Russia and elsewhere in Europe. An active member of the Russian Jewish Congress,[35][53] Khan regularly contributes to the European Jewish Fund, a non-profit organization aimed at developing European Jewry and promoting tolerance and reconciliation.[19] Khan along with Stan Polovets, Mikhail Fridman, Pyotr Aven, and Alexander Knaster founded the Genesis Philanthropy Group in 2011, whose purpose is to develop and enhance Jewish identity among Jews worldwide.[20][54][55] In September 2016, it was announced that he was a member of an initiative to create a Holocaust memorial at Babi Yar in Ukraine. The Initiative Group of the Babi Yar Holocaust Memorial Center also inclued his long-term colleague Mikhail Fridman.[51]

Personal life

Khan has both Russian and Israeli citizenship.[1] He and his wife Angelika[5] have four children together,[25][56] and live in London[5] and Moscow.[5][19][56] In 2010, Khan purchased a home on Eaton Square in London. Khan remains active with sports, for example participating in endurance, off-road, and rally driving competitions.[5] He enjoys hunting and has a collection of sporting guns and rifles.[5][56] According to Wikileaks leaked US diplomatic cables, he was alleged in the past by other businesspeople to have carried handguns to business meetings in Russia.[57]

See also

References

  1. 1 2 3 4 5 6 7 8 9 10 11 12 13 "DEA's Supervisory Board: German Khan Profile". DEA Magazine page 25. DEA website. February 2016. Retrieved 2016-11-10.
  2. ↑ "The World's Billionaires: #133 German Khan". Forbes. Archived from the original on 26 September 2015. Retrieved 20 November 2016.
  3. ↑ "Forbes World's Richest People". Forbes. October 2004. Retrieved 2016-03-11.
  4. 1 2 3 4 5 "One of the original founders of Letterone, Mr Khan is a member of the Board of Directors of the L1 Holdings and L1 Investment Holdings.". LetterOne. Retrieved 2016-03-11.
  5. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 "German Khan the oligarch behind TNK". Luxatic. 3 June 2015. Retrieved 2016-11-10.
  6. 1 2 3 4 5 "Profile: Mikhail Fridman — from rugs to riches". Financial Times. 2 March 2015. Retrieved 2016-03-11.
  7. 1 2 3 4 5 6 7 8 9 10 11 12 13 "German Borisovich Khan". Bloomberg Businessweek. Retrieved 2016-11-10.
  8. 1 2 Chazan, Guy (5 March 2015). "Mikhail Fridman: The Alpha oligarch". Financial Times. Retrieved 2016-03-11.
  9. 1 2 Yenikeyeff, Shamil (23 November 2011). "BP, Russian billionaires, and the Kremlin: a Power Triangle that never was" (PDF). The Oxford Institute for Energy Studies. Retrieved 2016-03-11.
  10. 1 2 "Mikhail Fridman - Profile". The Moscow Times. Retrieved 2016-03-11.
  11. 1 2 "BP to buy back $8 billion of shares, returning its 2003 investment in TNK-BP to shareholders". BP.com. 22 March 2013. Retrieved 2016-11-10.
  12. 1 2 3 4 5 "One of the original founders of LetterOne, Mr Fridman is Chairman of the Board of Directors of L1 Holdings and L1 Investment Holdings". LetterOne. Retrieved 2016-03-11.
  13. 1 2 3 "Rosneft and BP Complete TNK-BP Sale and Purchase Transaction". BP. 20 March 2013. Retrieved 2016-03-11.
  14. 1 2 3 4 5 Callus, Andrew (4 December 2012). "Insight: UK court reveals fear and mistrust at TNK-BP". Reuters. Retrieved 2016-11-10.
  15. 1 2 3 "LetterOne". Letterone.lu. Retrieved 2015-09-26.
  16. 1 2 Leite, Julia (26 October 2015). "Fridman Offers $4 Billion to Merge Brazil Carriers Oi, Tim". Bloomberg. Retrieved 2016-03-11.
  17. 1 2 3 Macalister, Terry (8 March 2015). "Ex-BP boss aims to build major energy industry player from scratch | Politics". The Guardian. Retrieved 2015-09-26.
  18. 1 2 3 4 Alic, Jen (23 June 2013). "Alfa Billionaires Launch L1 Energy Fund". Oilprice.com. Retrieved 2015-09-27.
  19. 1 2 3 Sher, Gilead (6 May 2011). "The world's 50 Richest Jews: 11–20". Jerusalem Post. Retrieved 14 May 2011.
  20. 1 2 David M. Herszenhorn (26 June 2012). "Russians Join Israel to Start Jewish Prize of $1 Million". The New York Times. Retrieved 2015-09-07.
  21. 1 2 "Уюм Цеплюм | Ахгмея Яопюбнвмхй". Rb.ru. Retrieved 2015-09-27.
  22. ↑ "Talent Equity Exclusive". WardHowell.com. February 2016. Retrieved 2016-11-10.
  23. ↑ "German Khan". Peotek. Retrieved 2016-11-10.
  24. 1 2 3 4 5 6 7 "German Khan - Executive Director of TNK-BP". AAR.ru. Retrieved 2016-11-10.
  25. 1 2 3 "Meet the Russian Billionaires That Took on BP and Won". CBS News. 18 May 2011. Retrieved 2016-11-10.
  26. 1 2 "German Khan". Alfa Group. Retrieved 2016-11-10.
  27. ↑ "Shareholder dispute could drive Kyivstar into technical default". Kyiv Post. 11 April 2007. Retrieved 2016-03-11.
  28. ↑ White, Gregory (14 November 2011). "TNK-BP Russian Partner Relishes Conflict". Wall Street Journal. Retrieved 2016-11-10.
  29. ↑ "BP, Rosneft Announce Historic Share-Swap Deal, Joint Arctic Exploration Alliance". IHS Markit. 17 January 2011. Retrieved 2016-11-10.
  30. 1 2 "Cash-laden oligarchs hunt pastures new". Financial Times. 5 April 2013. Retrieved 2015-09-27.
  31. ↑ "7 Richest Oil Baron's In The World". Billionaires Newswire. 20 November 2015. Retrieved 2016-11-10.
  32. 1 2 Kottasova, Ivana (16 December 2014). "Putin's cronies lose $50 billion". CNN. Retrieved 2016-11-10.
  33. ↑ "Russian tycoon Fridman to invest $16bn in US & European telecoms - media". RT. 6 April 2015. Retrieved 2016-03-11.
  34. 1 2 Reed, Stanley (28 June 2013). "2 Hard-Charging Oligarchs Returning to Global Energy Market". New York Times. Retrieved 2016-11-10.
  35. 1 2 Rocker, Simon (13 November 2014). "Russian philanthropists bound for London". The Jewish Chronicle. Retrieved 2016-11-10.
  36. 1 2 3 4 Bershidsky, Leonid (5 March 2015). "Not All Russian Billionaires Are Putin Cronies". Bloomberg. Retrieved 2016-03-11.
  37. 1 2 3 Macalister, Terry (8 March 2015). "Ex-BP boss aims to build major energy industry player from scratch". The Guardian. Retrieved 2016-03-11.
  38. ↑ "Ex-British trade minister Davies joins Russia's LetterOne". Reuters. 7 May 2015. Retrieved 2016-03-11.
  39. ↑ "Former Swedish premier Bildt appointed LetterOne board adviser". Reuters. 14 May 2015. Retrieved 2016-03-11.
  40. 1 2 "LetterOne completes purchase of RWE Dea for €5.1 billion". Oil and Gas Journal. 2 March 2015. Retrieved 2016-03-11.
  41. ↑ "Russian billionaire to sell North Sea gas assets - media". RT. 18 March 2015. Retrieved 2016-03-11.
  42. ↑ Hook, Leslie (12 February 2016). "Uber picks up $200m from Russian billionaire Mikhail Fridman". Financial Times. Retrieved 2016-03-11.
  43. ↑ Amon, Michael (8 May 2015). "Russian Billionaire Mikhail Fridman Looks to Sell U.K. Gas Fields". Wall Street Journal. Retrieved 2016-03-11.
  44. ↑ "Fridman looks to avert political row by selling North Sea fields". Financial Times. 17 March 2015. Retrieved 2016-03-11.
  45. ↑ Khan, Mehreen (11 October 2015). "Billionaire Jim Ratcliffe snaps up North Sea oil fields". The Telegraph. Retrieved 2016-03-11.
  46. ↑ Adams, Christopher (11 October 2015). "Ineos targets further North Sea assets in wake of $750m deal". Financial Times. Retrieved 2016-03-11.
  47. ↑ Adams, Christopher (11 October 2015). "Ineos targets further North Sea assets in wake of $750m deal". Financial Times. Retrieved 2016-11-10.
  48. ↑ "Russia's Fridman spends $1.6bn on Norwegian oil and gas fields". Financial Times. 14 October 2015. Retrieved 2016-03-11.
  49. ↑ "Dea - New Dea". DEA Group. Retrieved 2015-09-27.
  50. ↑ Cam, Deniz (3 March 2016). "Richest People In Europe". Forbes. Retrieved 2016-11-10.
  51. 1 2 "Petro Poroshenko announces initiative to create Holocaust Memorial Center". BabiYar.org. 29 September 2016. Retrieved 2016-10-06.
  52. ↑ "Alfa-Bank's Clients Donated Million Rubles to the Life-Line Fund". Alfa Bank. 12 November 2008. Retrieved 2016-11-10.
  53. ↑ "At the Center of Jewish life in Russia since 1996" (PDF). Russian Jewish Congress. 2012. Retrieved 2016-11-10.
  54. ↑ "Project Genesis events". Yad Vashem. 2009. Retrieved 2015-09-27.
  55. ↑ "Itzhak Perlman, "Fiddler to the World," Awarded 2016 Genesis Prize".
  56. 1 2 3 Hecht, Albert (17 March 2014). "Mikhail Fridman & German Khan Buying German Oil Company for $7 Billion". Jewish Business News. Retrieved 2016-11-10.
  57. ↑ "Aar And Bp Negotiating A "Cease-Fire"". Telegraph. 2011-01-31. Retrieved 2015-09-27.
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