Millionaires Hurting in Moscow
Moscow Millionaires Fair Opening
This year’s millionaires fair in Moscow was what could best be described as “a disaster.” Even an offer to “Buy one get one free,” on luxury yachts failed to attract any buyers.As recently as this summer, it seemed every Russian millionaire worth his salt needed a minimum of three yachts (one for each girlfriend presumably,) but that need went out the window along with billions of dollars of paper wealth as the financial crisis took hold of Moscow.
“Now it’s all over,” said Irina Ivanova, manager of Premier Yachts, standing beside the 18-meter Princess yacht, which was guarded by men in ninja outfits. A customer of hers in the Russian town of Samara, she said, had recently sold a boat worth €1.5 million ($1.94 million) for less than one third that price. “He had to cover a debt in a hurry.”
Demand has become so bad, she added, that her company is selling the boats two-for-one. “You buy an 18-meter and you get a 10-meter yacht free… Nobody has taken us up on it yet, but at least it keeps people calling.”
Russian Oligarchs are being bailed out with government funds left and right. Metals magnate, Oleg Deripaski has been granted a $4.5 billion government loan to enable him to pay off a group of western banks and prevent them from seizing a 25% stake in his company Norilsk Nickel, and Mikhail Fridman’s Alfa Group was loaned $2 billion to repay a debt to Deutsche Bank and prevent the loss of its 44 percent stake in VimpelCom, one of Russia’s largest cellphone companies. Deripaska is estimated to have lost $16 billion on paper, which admittedly pales in comparison to Roman Abramovich’s $20 billion losses, but still……
It is reasonable to think that once the dust has settled, many of these flamboyantly wealthy Russians will no longer be in a position to throw money around in the style to which they have become accustomed. All government loans are due end-2009, and the government now holds large stakes in both companies as collateral.
The failure of the Millionaires fair is just the beginning, and the face of Russian capitalism will change for sure. Exactly what the new face will be is uncertain and it may be some time before we witness the sort of record sale price reached for “La Leopolda,” a villa in France which sold to an un-named Russian for €365 million during the summer.
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Comments on Millionaires Hurting in Moscow
Wow, interesting post, just shows that its not the little man that is struggling with debit and finances, that this can hit anyone anywhere at anytime, we all have to be so careful, and this happened too a millionaire who would have thought????