Sergey Shishkarev, a new member of the Forbes list, is building a national transport champion.
Sergey Shishkarev is a founder of Delo Group. The headquarters of the Company is located in the recently restored two-story mansion on Bolshaya Nikitskaya Street. There was not a soul in the center of Moscow on Friday noon. Since the end of March, the capital's citizens are on lockdown due to the fear of catching the coronavirus.
According to Mr. Shishkarev, most of the Company’s employees are working from home now. Sergey Shishkarev moved from his Moscow apartment to the house in the suburbs. However, he does not recognize the hands-free greetings fashion and still prefers the usual handshake: “I am a fatalist in this regard”.
“The business activity has reduced due to the coronavirus pandemic, but we try to make use of it – we have time to sort out and structure our assets,” Mr. Shishkarev says. In late autumn 2019, he surprised the transport market by outbidding Roman Abramovich (No. 10) and Vladimir Lisin (No. 2) in the fight for the Government’s stake in TransСontainer, the largest container operator in Russia. This purchase made Mr. Shishkarev one of the industry leaders and ensured his presence in the Forbes list with a fortune of $700 million. How did Shishkarev build his business, and who helped him?
Son of the port
The Nord-Ost that hit Novorossiysk in November 1993, became a real natural disaster for the city. The hurricane wind reached 60 meters per second unrooted the trees, turned over stalls and knocked people down. Hundreds of vessels could not be put out to sea and got stuck at anchorage. The Chief dispatcher Nikolay Shishkarev did not leave his post for days.
“The collapse in the port blocked the unloading operations for several vessels with tangerines and bananas on the New Year’s Eve. Failed to be saved, the fruit turned into goop, suitable only for feeding livestock,” recalls Sergey Shishkarev, the son of the Chief dispatcher. He had to deal with cargo clearance, and eventually even helped with the unloading of the rotten fruit.
As a child, Shishkarev Jr. could spend all days long at the port. He was often at his father’s office during the conference calls, inspected the port together with him and knew the dockers: “I saw the port from the inside and how it was operated, the planning, the team-assembling for the vessel’s unloading, the mooring line-up and how railway operates”.
Finally, Mr. Shishkarev got bored with the port so that he decided to become a diplomat. The command of the Marine Corps of the Northern Fleet where he served, recommended him to the Military Red Banner Institute of the Ministry of Defense (Department of Western Languages), which Sergey Shishkarev graduated with honors in 1992. Military translators were not in high demand in the early 1990s, and Mr. Shishkarev was transferred to the reserve after his graduation. Then he decided to return to his native Novorossiysk and go into business.
The port of Novorossiysk turned into OJSC Novorossiysk Commercial Sea Port (NCSP) after corporatization in 1992. The employees received its shares. Soyuzmezhtrans and Inflot faced the same situation, they lost their agenting monopoly after privatization. So, Mr. Shishkarev saw a potential market opening. Prior to the November hurricane, he set up the company “Delo” in August 1993 to provide agency services at NCSP. Two dozen of horses were sent to Italian meat factory as the first cargo load of “Delo”.
“Delo” was fortunate to deal with the largest cargo’ clearance. They were given the green light,” said a former employee of one of the Novorossiysk port facilities. According to the Forbes source, it was firstly the credit of Mr. Shishkarev Sr. who had great authority in the port. He notes that “Delo” was supported by Moscow (Sergey Shishkarev was an Adviser of the Minister of Railways Nikolai Aksenenko in the late 1990s).
In 1998 Novaya Gazeta wrote that “Delo” became the main transport agent in the port, having received the right to provide more than half of all agent, intermediary and forwarding services. The General Director of the port Valery Bykov took part in setting up the Company and NCSP was the co-founder. According to the NCSP quarterly reports in 1999-2000 the port owned 15% of “Delo”.
“The Chief dispatcher certainly was one of the top-tree port executives,” said Viktor Ekalo, a former employee of “Delo”. However, he would not lobby his family’s interests and helped his son with advice and experience. According to Mr. Ekalo, “Delo” handled less than 15% of the NCSP cargo flow.
Sergey Shishkarev mentions that his father shared his experience with him and “gave him the honorable name, which is respected in the industry by this day. Shishkarev Sr. was the “Soviet Director” in the proper sense of the word and was absolutely far from commerce. But the son of the Chief dispatcher had the entrepreneurial spirit.
Sergey Shishkarev launched the transshipment of coiled steel in the NCSP in 1994, made an agreement on supplies with the Novolipetsk Metallurgical Complex. “They operated via Ukraine ports, it was longer and more expensive. The first loading took 23 days: The captain might have hated me. But the efforts were not in vain. Magnitogorsk and Karaganda Metallurgical Plants as well as Krasnoyarsk and Bratsk Aluminum Plants became Delo’s clients, and metal shipments increased to millions of tons. We earned $2-3 per ton. It was good money at the time,” Mr. Shishkarev recalls. He spent his earnings on the purchase of the NCSP shares from the port workers.
Battle of Novorossiysk
Sergey Shishkarev and the General Director of the port Vladimir Kovbasyuk were accompanied by people in black uniforms while getting out of the cars that stopped at the NCSP checkpoint around midday on the 20th of May 2005. The iron gate of the port was blocked tightly by the Private Security Company’s employees. But the raiders found a way: they smashed the nearby entrance gate and Shishkarev’s team came to Mr. Kovbasyuk’s office. Mr. Kovbasyuk gave orders to the employees but they were not in a hurry to carry them out. It turned out that the previous day the Board of Directors of NCSP suspended Mr. Kovbasyuk from work.
Two parties of the port shareholders fell out completely after that. “Delo” represented one party and controlled 19.8% of NCSP. The second represented the interests of Nikolai Tsvetkov’s financial corporation Uralsib (about 30%) as well as the interests of Alexander Skorobogatko (No. 32) and Alexander Ponomarenko (No. 31) (16%).
It was possible to maintain the uneasy balance of interests until Mr. Shishkarev with his partners set on acquiring a blocking stake of NCSP. Negotiations with the minority shareholders among the port employees became the trigger for a corporate war. A real jackpot was on the line: the largest port in Russia with the revenue of 5.2 billion rubles and over 70 million tonnes of cargo turnover. Despite the support of Alfa-Eco, the opponents outbid “Delo”. Sergey Shishkarev comments on that period unwillingly: “We had different views on the development of the port. I considered this commercial offer profitable and took it”.
As a result, Mr. Shishkarev’s Group sold the NCSP shares gaining about $100 million with $10 million going to Alfa as a compensation. A similar NCSP package (20%) was sold during the IPO for almost $1 billion in 2007.
Universal container made a revolution
Mr. Shishkarev says that he invested all his capital in the infrastructure of the south-eastern part of the Novorossiysk port. According to his acquaintance, the opportunity to freely develop this project was the condition of breakup with Mr. Skorobogatko and Mr. Ponomarenko. But Sergey Shishkarev himself denies that and says that he began to invest in the new part of the port long before the sale of NCSP shares. The construction of five new berths, independent of NCSP, began in the south of Novorossiysk in 1996 as a part of the federal program “Revival of the Russian Commercial Fleet”. The new infrastructure was privately-owned. Three berths (No. 39, 39a and 39b) belonged to NUTEP, two more (No. 40 and 41) were the property of the CJSC Portholding’s. Yury Aksenov, a former Secretary of the Novorossiysk port Party Committee, headed CJSC Portholding.
The transport magnate Konstantin Nikolaev with his partners acquired NUTEP in 2002 (before that, a criminal case was initiated against NUTEP CEO Mikhail Solntsev). After the deal Mr. Nikolaev announced that he was going to build a new container terminal at the NUTEP berths for $25 million together with Mr. Shishkarev. The businessmen knew each other since the early 1990s. Prior to the launch of “Delо”, Mr. Shishkarev worked under the leadership of Mr. Nikolaev for about a year at the forwarding company “Petra” (“alma mater for the transport elite”). According to the founder of the National Container Company Vitaly Yuzhilin, who also joined the project, the idea to build the container terminal in Novorossiysk belongs to Sergey Shishkarev. Mr. Yuzhilin, Mr. Nikolaev and their partners received 50% of NUTEP, Mr. Shishkarev’s Company owned another half (later he bought out all the shares). “He is a “container man” since his father worked as the Chief dispatcher of the port,” the billionaire from the transport industry says ironically. As Mr. Shishkarev’s course mate at the Military Red Banner Institute and co-worker Sergey Zavorotynsky recalls, Sergey Shishkarev literally forced his employees to deal with containers in the 1990s. According to Mr. Zavorotynsky, most of the top managers wondered and insisted on dealing with something else: bulk cargo, metals, minerals. But Sergey Shishkarev held his ground.
Mr. Shishkarev considers the freight container to be one of the greatest inventions of the 20th century, which can only be compared to the invention of a plastic water bottle: “A universal container made a revolution in the world trade.” The businessman says that he brought the first container to Novorossiysk in the mid-1990s. NUTEP was launched in 2004, it handled over 50,000 TEU in 2005 (equal to 20 ft container), and the container turnover doubled by the next year.
Meanwhile “Delo” acquired Portholding’s berths.
Portholding CEO Mr. Aksenov was investigated before the deal, the similar situation happened to NUTEP CEO. And Mr. Shishkarev asked the former Minister of Transport Sergey Frank to deal with the ownership of the berths. Sergey Shishkarev initiated the audit as the State Duma deputy. Mr. Shishkarev turned from a local businessman into a federal-scale figure thanks to his work in the Parliament.
Curator of Transport
The Novorossiysk 2003 mayor elections were one of the most dramatic events in the political history of the port city. It was the fight between the State Duma deputy Sergey Shishkarev and Vladimir Sinyagovsky, a protege of at that time Kuban Governor Alexander Tkachenko. The regional press wrote that Mr. Shishkarev wanted to strengthen his position in NCSP, that he withdrew the funds to offshore and intended to become the Governor. Mr. Shishkarev claimed that the information war had been declared against him and he accused the regional authorities of “a blunt outrage.”
Finally, Mr. Shishkarev was not allowed to take part in the elections, and Mr. Sinyagovsky received over 70% of the votes.
Mr. Shishkarev filed complaints to the Central Election Commission of the Russian Federation, to the State Duma and to the Prosecutor-General's Office. But he cooled down rather fast. “I thought it would be wiser and better to negotiate,” Mr. Shishkarev said in the interview with Forbes. After that settled, the founder of Delo Group was re-elected to the State Duma from the Krasnodar Krai for the second term. According to Mr. Shishkarev, he had to go into politics. Mr. Tkachev's predecessor, the Communist Governor Nikolai Kondratenko disfavored the business. Then Sergey Shishkarev decided to change the authorities’ attitude towards entrepreneurship.
He lost the elections to the Legislative Assembly of Novorossiysk. But in 1999 he was elected to the State Duma as a single-mandate deputy, where he met with another independent deputy Dmitry Rogozin. Mr. Rogozin headed the State Duma Committee on International Affairs and asked Mr. Shishkarev to become his Deputy. Mr. Rogozin recalls that “He has always been a bright and daring person. I like such people. And that’s why we quickly forged a bond and became friends”. In 2002 Rogozin became the President’s Special Representative in the Kaliningrad Region. Mr. Shishkarev headed the Committee and soon enough Delo Group launched a cargo transshipment in the port of Kaliningrad. Then Mr. Rogozin convinced his friend to join his political wing “Rodina”. Sergey Shishkarev partook in financing the project and led the Rodina campaign headquarters in the 2003 elections.
In 2006, Mr. Shishkarev decided to join the United Russia party. He was not satisfied with the “bashing of the Government” from the “Rodina” party. After an hour conversation with the State Duma Speaker Boris Gryzlov who led the United Russia faction, Mr. Shishkarev was definitively convinced. Mr. Rogozin did not take Shishkarev’s decision lightly and even called the recent party member “a traitor”. Despite almost family ties (Dmitry Rogozin is the godfather to Nikolai, Mr. Shishkarev’s youngest son), the friends were not in touch for some years and reconciled only in 2012.
As a member of the United Russia party, Sergey Shishkarev achieved his lifelong dream - he played for the parliamentary football team. The captain of the team Boris Gryzlov invited him there. In the interview for the United Russia official website Shishkarev said that Mr. Gryzlov recommended him to lose some weight.
Things were going well not only in the sport. Back in 2001, Sergey Shishkarev drafted a bill on ports. In spring 2007, Mr. Shishkarev together with some of United Russia members (including Mr. Yuzhilin) introduced the bill “On Seaports” to the State Duma. The law was adopted in autumn 2007. It set a 49-year lease term for the berths, previously the Government granted a 1-year lease at most, said Serik Zhusupov, the Executive Director of the Association of Commercial Sea Ports. The stable conditions for business development were provided and it led to a great increase in cargo turnover. Sergey Shishkarev was re-elected to the United Russia at the end of 2007. He headed the Transport Committee of the State Duma. Previously, there was no transport committee, Mr. Shishkarev was the Vice Chairman at the Committee on Energy, Transport and Communications that oversaw the industry.
According to Mr. Yuzhilin Sergey Shishkarev became the Chief transport curator in the State Duma and during the convocation introduced all key existing transport laws in Russia.
Sergey Shishkarev denies lobbying of Delo Group: “Then it became clear: either business or politics. And I chose not to combine”.
At the end of the third deputy term, Mr. Shishkarev’s relations with the United Russia leaders changed. Sergey Shishkarev often criticized the authorities due to the motor ship “Bulgaria” tragedy and the Yak-42 aircraft crash, but the United Russia did not like it.
The situation was so tense that Sergey Shishkarev intended to leave the United Russia for the Communist Party of the Russian Federation, but then decided to join the revival of the “Rodina”. According to a source close to the “Rodina”, the Administration of the President recommended him to reduce the political activity.
Sergey Shishkarev says that he lost interest in politics in 2011 and returned to business. In any way, Mr. Shishkarev regained the authority’s favor. Sport played its part once again.
“Sergey, congratulations! Do you understand what you have done?!” - the President of the Russian Olympic Committee and the First Deputy Chairman of the State Duma Alexander Zhukov shouted on the phone. “No,” admitted Mr. Shishkarev. “Number One watched your team on Channel One!” - exclaimed Mr. Zhukov. Shishkarev explained to the journalist of Soviet Sport that the high-ranking member of the United Russia talked about the Russian President, who watched handball on Channel One. On the 20th of August 2016, Sergey Shishkarev's phone burst with congratulations as the national women's handball team won the 2016 Summer Olympics in Rio de Janeiro. A year before the businessman headed the Handball Federation of Russia (the HFR).
He did not expect to receive the offer to head the HFR. Two influential acquaintances of Mr. Shishkarev asked him simultaneously about it: Mr. Rogozin, the handball master of sport, and Igor Levitin, the President’s assistant who oversaw the sport, the former Minister of Transport. Sergey Shishkarev thought that they conspired. But after watching a couple of handball battles, he agreed. The legendary handball coach Evgeny Trefilov recalls that at first Sergey Shishkarev used to start his conversation with the Minister of Sports Vitaly Mutko with the football talk as a force of habit. Mr. Shishkarev is a hardcore football fan. He was the captain of the city team in his childhood, and then he financed and headed the Board of trustees of the Novorossiysk “Chernomorets” football club. He founded the Brazilian children’s football school and stadium together with Mr. Gryzlov. He was also left halfback for the State Duma team. “At first Mr. Shishkarev took on a new project with caution and concern, but then the atmosphere of handball carried him away,” Mr. Rogozin says.
According to Mr. Trefilov, the HFR was falling apart before Shishkarev: there were not enough funds for the regular season, as well as for the doctors and massage therapists. Handball received the necessary financial support with Shishkarev’s arrival. The businessman has increased the bonus for the winners of the main championships. It became an important part of the women's team victory in Rio de Janeiro, as well as of the receiving the silver medals at the EURO 2018 and the bronze medals at the World Championship 2019. “A kind attitude and a financial motivation. What else does an athlete need?” - says the 2016 Summer Olympics champion Anna Sen. Thanks to Sergey Shishkarev, handball returned to the federal media and to TV channels.
In order to increase the popularity of this sport in the capital Mr. Shishkarev founded two Moscow handball clubs: women’s CSKA and men’s Spartak. In March 2020, Spartak handball club was renamed to CSKA. It would have been the worst nightmare for the football fans. “The Spartak brand did not work,” Sergey Shishkarev explains. “The support handball received from the Ministry of Defense was much more significant. Moreover, it would be impossible for two strong brands to share one hall”. However, for example, CSKA and Spartak hockey clubs share the same arena – Spartak’s. He intends to build a new arena for several thousands of spectators in Moscow, where both teams (men’s and women’s) and the national teams will train. Mr. Shishkarev's total investment in the development of handball is estimated at over $30 million.
“Going once, going twice - gone!” The auctioneer pronounced the set phrase on the 27th of November 2019 at the VTB office on Myasnitskaya Street. Sergey Shishkarev was very emotional about this: “It feels better than winning a jackpot at a casino! It's an indescribable feeling”. The purchase of TransContainer coincided with the Marine Corps Day, and Sergey Shishkarev took it as a sign of destiny: “There is always victory where we are,” [the motto of the Marines], nothing less than this could happen on this day”. He personally attended the auction unlike his opponents Roman Abramovich and Vladimir Lisin. He is still keeping his bid plate with number 3 at his office.
Mr. Shishkarev’s business expanded significantly after the acquisition of 30% shares of the largest container port operator Global Ports from Konstantin Nikolaev and the partners in 2018. But he was still inferior in terms of financial and administrative influence compared to these billionaires, regulars on the Forbes list. Few were aware that Sberbank had already provided a credit line for 120 billion rubles (the cost of TransContainer, taking into account the mandatory repurchase from the minority shareholders), and that he was actively negotiating a partnership with Rosatom. “The auction and the negotiations with the State Corporation were “two parallel processes,” says Shishkarev.
Sergey Shishkarev’s acquaintance close to the State Corporation requested him to give an expert point of view on Rosatom’s plan to become the world’s top-15 container shippers via the Northern Sea Route (the NSR). The businessman criticized the project, but Rosatom went on consulting with him. Shishkarev knew the Head of the State Corporation Alexey Likhachev since the early 2000s when both were deputies of the State Duma.
The talks about the NSR resulted in purchasing a 30% stake in Delo Group by Rosatom. According to Shishkarev, the State Corporation has a right to consider the option to buy out another 19% of the Group in 2023. The State Corporation explained that Delo Group’s expertise and infrastructure were attractive for the implementation its plans for the logistics development. The transaction price is not disclosed. Mr. Rogozin, who had been heading the State Commission on Arctic issues for several years, said that he did not participate in the negotiations. According to a source close to the deal, Rosatom needed an accommodating partner. Sergey Shishkarev was a good choice, one of the market players called him “conscientious and not reckless”.
Shishkarev informed his new partner about his interest in TransContainer allegedly after the negotiations began. And he personally negotiated for a loan in Sberbank. The top manager of the state bank said that Mr. Shishkarev approached the bank at the end of summer 2019 and noted that Shishkarev is well-known person in the industry but the decision to provide the loan was based on the asset’s value. “The main condition of the deal was the pledge of TransContainer shares proportionally to the loan,” says Shishkarev. He also mentioned that Rosatom also discussed a loan for the purchase of TransContainer with Sberbank. But the State Corporation denied its participation in the privatization of TransContainer and its partaking in the negotiations with Sberbank.
“TransContainer holds 45% of the Russian railway container operating market, while Global Ports and the other Delo Group’s assets operate 50% of the container turnover at the Russian ports. They are the champions without doubt. But Shishkarev is not satisfied with containers only. He is going to establish a “national transport champion,” says Alexey Bezborodov, the General Director of Infranews. “Mr. Shishkarev has the containers, the terminals and the ports. And he also needs vessels to have a complete set of logistic instruments”, - said Bezborodov. One billionaire from the transportation industry thinks that Shishkarev and Rosatom are implementing the Ziyavudin Magomedov’s concept. Prior to his arrest in 2018, Mr. Magomedov planned to create the united supply chain based on TransContainer, the port of Novorossiysk and Fesco”.
Shishkarev is open about his interest in Fesco, Ziyavudin Magomedov’s latest major asset: “We have not received any sell signals and we are not going to initiate them, taking into consideration the shareholders’ situation.” If it comes to a deal, Mr. Shishkarev promises to negotiate transparently. His attitude towards the economic decline is philosophical: “One very close and very intelligent person used to say: it is not important what you feel when you are on top, but it is very important to go through the hardship. We definitely have what it takes to go through the hard part”.
According to Forbes, Sergey Shishkarev’ fortune is $ 700 million.
Author: Sergey Titov
Source - Forbes Russia