Russian oligarchs’ billionaire banker looks to sever his ties with the past

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The nonprofit has pledged about $US650 million to battle the illness, whereas additionally betting on early-stage most cancers analysis corporations. That’s added yet another layer of safety to Knaster’s fortune and distanced him from his previous at a time of sweeping sanctions on these affiliated with Russian wealth.

“From a strategic standpoint, he made an excellent transfer to place his belongings into this philanthropic basis,” says US tutorial David Lingelbach, who headed Financial institution of America’s Russian operations within the Nineties and had dealings with Knaster. “I guess Mikhail Fridman needs he’d executed one thing like that.”

Knaster was described as Russian billionaire Mikhail Fridman’s “right arm” at one point.

Knaster was described as Russian billionaire Mikhail Fridman’s “proper arm” at one level.Credit score:AP

Knaster declined to remark via a spokesperson.

Cash path

Like others near Russian cash, Knaster can’t fully scrub the origins of his fortune, about half of which is tied up in Pamplona. His rise from mid-ranking financial institution government to non-public fairness energy participant, proprietor of an Italian soccer membership and philanthropist is due — no less than partially — to him being in the appropriate place on the proper time: Moscow within the freewheeling early post-Soviet years.

After attending Harvard Enterprise Faculty, the place he studied alongside future billionaires together with York Capital’s Jamie Dinan and businesswoman Thai Lee, Knaster turned to funding banking, with stints in London and New York for Deutsche Morgan Grenfell, Bankers Belief Co. and Simmons & Co.

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Within the mid-Nineties he ended up again in his birthplace. As Russia opened to Western financiers, Knaster turned head of Credit score Suisse First Boston’s native operations. CSFB was a robust participant within the Moscow banking market and Knaster, among the many agency’s largest earners, made vital contacts there.

The transfer turbocharged his profession and in 1998 he was appointed chief government officer of Fridman’s Alfa Financial institution. Because the nation’s monetary disaster unfolded, he took a lead position in serving to the lender kind out its debt issues, in response to an individual concerned on the time.

Shortly establishing himself as a useful adviser to the oligarch and his internal circle, he was rewarded with a stake in an Alfa holding firm that had investments in oil large TNK-BP, Alfa Financial institution itself and telecoms firm Turkcell Iletisim Hizmetleri. Knaster obtained greater than $US50 million in dividends from his Alfa holding between 2001 and 2008, in response to Bloomberg’s wealth index.

In 2004 he stepped down at Alfa Financial institution and based London-based Pamplona, which might go on to handle almost a 3rd of Fridman and different Alfa Group executives’ wealth. It will additionally mint Knaster a fortune.

Pamplona was arrange with almost all of its personal fairness funds coming from Fridman, Aven and Khan. When most of a agency’s backing is from a single supply, that investor often negotiates decrease charges and an even bigger revenue share.

In 1998, Knaster was appointed chief executive officer of Fridman’s Alfa Bank.

In 1998, Knaster was appointed chief government officer of Fridman’s Alfa Financial institution. Credit score:AP

Not on this case. Knaster, a savvy negotiator, secured the excessive charges typical for a personal fairness agency with a number of backers, in response to an individual acquainted who mentioned the phrases had been “exceptionally good.”

Buyout teams sometimes cost a 2 per cent charge on the capital they handle, and 20 per cent of any revenue from offers. For Knaster this meant he may make tens of millions of {dollars} a yr in assured earnings. Pamplona oversaw about $US750 million of Knaster’s cash on the finish of 2021, in response to Bloomberg’s wealth index.

“I at all times considered Pamplona as a car for managing a few of Fridman’s wealth,” says Lingelbach, now a professor of entrepreneurship on the College of Baltimore. “It by no means in my judgment felt to be an impartial entity per se.”

A Knaster spokesperson mentioned that Pamplona additionally began hedge funds that had little or nothing to do with Alfa and LetterOne, that its charges had been market fee and that the oligarchs made follow-on investments in Pamplona as a result of they had been impressed by the robust returns delivered by Knaster’s group on its preliminary fund.

His story is a outstanding instance of simply how a lot wealth has been accrued by advisers, managers and facilitators for the lads who purchased Russian state belongings for peanuts within the Nineties and bought them at huge revenue. It’s additionally an illustration of how laborious severing connections could be.

Knaster was additionally known as upon to advise on different vital Alfa-LetterOne transactions. This included the 2013 sale of TNK-BP that netted $US14 billion for Fridman, Aven, Khan and Kuzmichev. Knaster was one of many architects of the deal and received a LetterOne stake price about $US500 million on the time, in response to folks with information of the matter.

Charitable mission

The yr after negotiating TNK-BP’s sale, Knaster was hit by private tragedy when his father died of most cancers. That prompted him to arrange the Mark Basis in 2014. He transferred his stakes in LetterOne and Alfa Financial institution’s proprietor, ABH Holdings, to a holding entity for the muse the identical yr, in response to an individual accustomed to the matter, who requested to not be recognized as the main points aren’t public. Since then it has obtained greater than $US171 million, most of it immediately from Knaster and solely about 10 per cent via LetterOne and ABH dividends, the individual mentioned.

The worth of the muse’s stakes in LetterOne and Alfa Financial institution’s proprietor are considerably lower than their guide worth as they’re minority positions in carefully held, illiquid corporations, a spokesperson for Knaster mentioned.

Days earlier than Russia’s invasion of Ukraine — the birthplace of Knaster’s spouse — as tensions had been ramping up, he dedicated so as to add $US500 million extra to the muse.

A few of the nonprofit’s enterprise bets have already paid off, together with an early funding in cancer-test supplier Grail, which was acquired by Illumina for $US8 billion in 2021. It has additionally invested in biopharmaceutical firm Immunitas Therapeutics, in addition to biopsy-technology agency C2i Genomics and cell reprogramming startup Interius Biotherapeutics.

In an indication of the muse’s significance to Knaster, he’s engaged on a grasp’s diploma in molecular biology to go together with his economics PhD from the Russian Academy of Science and Harvard MBA.

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Alongside his charity work and possession of Pisa Sporting Membership, Knaster can also be concerned in new money-spinning ventures. He’s teamed up with fellow Harvard alumni and Milwaukee Bucks co-owner Dinan and hedge fund supervisor Edward Eisler to launch a particular objective acquisition firm in search of sports activities alternatives.

He doesn’t seem to have misplaced his knack for dealmaking. The Cayman Islands-based firm that represents him and the opposite SPAC sponsors paid lower than $US25 million in complete for its stake. It’s now price about $US80 million.

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