RAPAPORT... Fabergé, the best known Russian jewelry brand, might be returning home. Renova, the leading Russian asset management company, which is owned by Russian billionaire Viktor Vekselberg, is expected to become the largest shareholder in Pallinghurst Resources Investment Fund, reported Kommersant, the Russian daily. The newspaper further reported that Pallinghurst, which bought the Fabergé brand from Unilever in January for $30 million to $40 million, will team with Renova to produce jewelry and clothes under the Fabergé brand. Vekselberg personally has a Fabergé collection worth more than $100 million.
Pallinghurst is headed by Brian Gilbertson, former president of SUAL, a Vekselberg controlled aluminum company recently merged with RUSAL and Glencore. Gilbertson said Pallinghurst and its partners planned to use Fabergé “to create the world’s most exclusive luxury goods brand.”
In other news, Kommersant reported that Pallinghurst hopes to cooperate with ALROSA to create a Fabergé diamond brand but ALROSA denied interest in the Fabergé project. “The company does not view projects connected with the use of the Fabergé brand as promising,” an ALROSA spokesperson told Interfax. In fact, in 2007, ALROSA tried to buy the Fabergé brand for a joint jewelry project with Kristall Smolensk, Kommersant said, citing company insiders.
ALROSA IPO RumorsFollowing hints in March by Sergei Vybornov, ALROSA’s new president, about a possible share float, ALROSA recently held unofficial initial public offering (IPO) negotiations in London, Dow Jones Newswires reported. Dow Jones’ banking sources said the talks were at an early and tentative stage and that they could lead to an IPO in the second half of this year.
“ALROSA intends to become a public company,” ALROSA spokesperson Andrey Polyakov told Dow Jones. “We have had discussions because we want to know the experts’ opinions about a future listing, but we are not in official negotiations.”
Polyakov said that ALROSA was not planning an IPO in the immediate future because the company first needs to undergo restructuring from a closed type joint stock company into an open joint stock company, as part of the deal to increase the federal government’s stake in ALROSA. Vybornov said earlier that such restructuring would take at least a year.
Meanwhile, on March 30, ALROSA held an executive board meeting in Mirny, Yakutia, at which company management presented both its 2006 report and the development plan extending to 2015. At the meeting, Vyacheslav Shtyrov, Yakutia’s president, urged the company to increase exploration work and operational efficiency.
In 2006, ALROSA, including ALROSA-Nyurba, produced $2.332 billion worth of rough diamonds, exceeding the target by 2.4 percent. Yuri Doinikov, the company’s first vice president, said that the core product sales amounted to $2.864 billion, comparable to 2005, while net profit reached R15,579 million — $605 million. The company spent R2,865 million — $1.11 million — on exploration, 13.3 percent more than in 2005, which resulted in discovery of six new kimberlite bodies, one of them with mineable diamond content. Doinikov acknowledged that the company should put more effort into geological prospecting to achieve sustainable development.
Shtyrov said he felt positive about the development plan, but the company would face many challenges in bringing it to life. “Geological prospecting should be increased not by the planned 17 to 18 percent, but by 200 to 300 percent,” said Shtyrov. “It’s evident now that [the company] needs not evolutionary, but revolutionary decisions.” Shtyrov said that reports made it look like the company is ahead of the competition, while it “is long behind the competitors in many areas.” Shtyrov emphasized the personnel shortage, which has recently worsened due to the advent of other employers, such as Surgutneftegaz and Transneft, in Yakutia.
Russians at BaselWorld 2007Presenting their collections at BaselWorld 2007 were two Russian watchmakers, Rekord and Maktime Watch Manufactory, and five jewelry companies — Almaz Holding, Guriaty, Jewellery Theatre, Rifesta ACB Jewelry and Russkie Samotsvety.
Among this year’s first-time exhibitors was a long-time visitor, Rifesta ACB Jewelry Company Ltd. “Participation in the show met our expectations,” said Maksim Strezhnev, Rifesta’s director general. “We’ve reached agreements with major trading companies about sales of our jewelry in Europe and America.” Yekaterinburg-based Rifesta presented 12 jewelry collections, including a new men’s line, Monomakh, designed after Russian imperial jewels. Strezhnev said Rifesta’s jewelry was well-received and won the company many compliments for design and the quality of the Russian diamonds.
Old timers seemed just as enthusiastic. “It’s our sixth presentation at BaselWorld, and we are extremely happy with the results,” said Natalia Savik, public relations director for the Moscow-based Jewellery Theater. “We’ve achieved our goals at the show by 100 percent.”
The Marketplace• Smolensk Kristall sales in the first quarter of 2007 grew 49 percent year-on-year to reach a record $96.9 million. The company said sales increased due to the new marketing initiatives, such as online sales and processing on commission.
• ALROSA sold 83 out of 85 offers of rough, worth more than $18 million, in its 21st special-size diamond auction, which ended March 23.
Article from the Rapaport Magazine - May 2007. To subscribe click here.