Luxembourg funds, “dividends” on $600 million bonds, special tax status for Gunvor in Singapore and spending on charity

What did we know until recently about the businessman and “citizen” Timchenko ( No. 12 in the Forbes ranking, $9.1 billion )? Fragmentary information has formed the following image: a mysterious billionaire and eminence grise who is friends with Vladimir Putin and also sells Russian oil and petroleum products abroad. For the November issue of Forbes magazine, Timchenko gave a long interview in which he spoke about relations with Putin and his version of events, including the history of creating the business, as well as the prospects for business development.

The businessman’s non-publicity has always extended to his business. For example, oil trader Gunvor disclosed only a single figure - turnover. And little is known about the Luxembourg fund Volga Resources, with which the businessman used to buy Novatek shares and other assets.

For the last few years, Forbes has been collecting a dossier on Timchenko’s business, which was used in preparing the ranking of billionaires: we have at our disposal the reports of Gunvor and Volga Resources.

“The Volga River flows from afar for a long time.” Although Timchenko began doing business in the late 1980s, his current assets were legally registered in the early 2000s, when he decided to divide the business with his former partners (read more about this in the interview). In 2002, Gunvor International was created, and in 2003, the railway operator Transoil was created. At that time, his area of interest included only oil and petroleum products trading and logistics; Timchenko also owned small stakes in Surgutneftegaz and Rossiya Bank.

In the fall of 2008, the gas company Novatek (the second gas producer in Russia based on the results of 2011) published data that the Luxembourg fund Volga Resources SICAV-SIF SA with a share of 5.1% became its shareholder . Gennady Timchenko was named as a co-owner of the fund. Over the course of two years, Volga Resources bought Novatek shares and collected a 23% stake (current market value of about $7 billion). In addition, the fund bought shares in the Russian Sea fishery producer (30.5%), the Geotek oil service holding (25%), the Kolmar coal company (30%) and other assets.

Although Timchenko was called a co-owner of Volga Resources, in reality, according to the documents, the fund had no other owners. The company Volga Resources SICAR SA ( SICAR means that the fund specializes in investments in risky assets, only professional investors can work with it) was registered in April 2007, but in July it changed its name to the already familiar Volga Resources SICAV-SIF SA (where SIF is a specialized investment fund , and SICAV is a fund format where the investor has the opportunity to buy and sell shares depending on the net asset value). At the same time, the fund issued 750 shares worth 750 thousand euros, which Timchenko bought.

According to Volga Resources' reporting for 2007, the fund's net assets barely exceeded 700 thousand euros. A year later, net assets increased to 313 million euros. For example, in 2008, Volga Resources spent 798 million euros on investments in the energy sector (purchasing shares of Novatek and, apparently, Yamal LNG). At the end of 2011, the fund's assets grew to $4.2 billion. But despite the previous name - Volga Resources, in fact, it was already a different fund: in the spring of 2011, Timchenko restructured his business.

For some time, there were not one, but three funds with the name Volga Resources: Volga Resources I and Volga Resources Investments (VRI) were added to the first Volga Resources fund. According to the reports of these companies, the shareholder, that is, Timchenko, decided to divide the assets: Novatek remained in Volga Resources, the remaining assets were transferred to VRI. VRI's net assets at the end of 2011 were estimated at $251 million.

Why was Volga Resources I needed? This is a tech company that was used to restructure Volga Resources. Firstly, in the course of several transactions, the fund's capital was reduced from 1.6 million shares (valued at $3.9 billion) to 200 shares (par value $200 thousand), and assets (investments in Novatek) are now secured by bonds issued by fund (at the time of the merger - 3.9 billion pieces with a par value of $1 each). Secondly, the fund has again changed its form from SICAV-SIF SA to SA (joint stock company), and, therefore, Volga Resources shares can be placed on the stock exchange if desired .

The main holder of bonds issued by the fund is Timchenko. In addition, according to reports, a small stake belongs to Volga 2010 (before the merger, it owned 65 million preferred shares of Volga Resources with an initial value of $65 million). The sole shareholder of Volga 2010 is Ural Invest, a former investment consultant to the Volga Resources fund, and now Timchenko’s management company. In an interview with Forbes, the businessman said that Ural Invest previously did not belong to him, but now it will be the property of his family.

How much does Timchenko earn from the fund, not counting the increase in the value of assets? In 2010, Volga Resources paid dividends amounting to approximately 60 thousand euros. But already in August 2011, the holders of the fund’s bonds, that is, Timchenko and Ural Invest, received $450 million, and in February 2012 another $84 million (at the same time Volga Resources bought bonds for $55 million).

How does Gunvor work? The company is often called a Swiss trader, but this is not entirely true. The parent company of the holding, Gunvor Group Limited, has been registered in Cyprus since January 2011 (before that it was called Clearwater Advisors Corporation, and its place of registration was the British Virgin Islands). Timchenko and his partner Torbjorn Tornqvist each own 44% of the shares of Gunvor Group, the remaining shares are reserved under the option plan for management.

Although Gunvor has begun to buy industrial assets (oil refineries, coal fields), its main business is still trading. The group has four trading offices: Geneva (Switzerland), Singapore, Dubai (UAE) and Nassau (Bahamas). The latter two were opened in 2011, so operations de facto take place through the Geneva and Singapore offices, which are structured in the form of subsidiaries: Gunvor SA (until July 1, 2011, trade in oil, petroleum products and coal was carried out through the Dutch company Gunvor International) and Gunvor Singapore Pte.

In 2010, Gunvor International's revenue was $59 billion, and Gunvor Singapore's was $12.7 billion, which is comparable to the group's reported turnover of $69 billion (the slight discrepancy is due to intra-group transactions). Net income for the same period for trading offices was $68 million and $23 million, respectively, which means profitability of a few tenths of a percent. In 2011, the Singapore company's revenue grew to $20.9 billion, and net profit to $63 million (Gunvor International did not disclose reporting). According to Gunvor Group, its total revenue was $87 billion and its net profit was about $300 million. For comparison, the Swiss company Glencore had revenue from oil and coal trading of $115 billion and operating profit of $700 million.

The already small profits of Gunvor's trading offices could have been even smaller if not for tax agreements. Gunvor Singapore is a participant in the local Global Trader Program and, instead of paying 17% income tax, pays a preferential rate of 5% on LNG transactions and 10% on other commodities. In January 2012, the company and the Singapore government extended the agreement for another 5 years with a preferential rate of 5%. For example, in 2011, Gunvor Singapore saved about $5 million in taxes.

Trading offices allocate part of their profits to dividends: Gunvor International paid $365 million for the period 2009-2011, Gunvor Singapore was not so generous - $21 million. Did Timchenko get this money? Formally, these dividends are received by the Cyprus Gunvor Group, and Timchenko himself in an interview with Forbes says: “We [with Tornqvist] take very few dividends from the company, because we reinvest everything. We are creating more and more offices around the world, buying assets.”

Charity. The Timchenko family has three charitable foundations. The Key Foundation was created to support families taking in children from orphanages (expenses in 2011 - about 100 million rubles). “Ladoga” - assistance to elderly people and cultural projects (more than 70 million rubles).

The Neva Foundation is registered in Switzerland and implements projects in the fields of culture, sports and medicine (one of the latest projects is the performance of the folk ensemble “Beryozka” in Geneva). There are no financial reports on its activities published on the website. According to Timchenko’s representative, the total amount of funds allocated for charitable activities by the businessman in 2010–2012 amounted to almost 1.5 billion rubles.

Sport. Timchenko said in an interview with Forbes that after riding a boat with Torbjorn Tornqvist a couple of times, he became interested in yachting. The businessman is the owner of the Katusha sailing team, which competes in the RC44 Championship Tour (in 2011 the team took 6th out of 15 places). Owners of other teams include his partner Tornqvist, owner of anywayanyday.com Kirill Podolsky and member of the Federation Council Valentin Zavadnikov.

In April 2011, Vladimir Putin publicly skated for the first time and took part in training young hockey players. Whether it was a coincidence or not, in May 2011 Timchenko was elected president and chairman of the board of directors of the St. Petersburg hockey club SKA. A year later, the billionaire became chairman of the board of directors of the Continental Hockey League (KHL).

How the business of billionaire Timchenko works