Ex-Senator Alexander Verkhovsky bought the Preobrazhenskaya Trawl Fleet Base (PBTF) from the family of Sakhalin Oblast Governor Oleg Kozhemyako. As a result of the deal, Verkhovsky became Russia’s second-largest fisherman in terms of quotas and sales, and Kozhemyako’s relatives could retain a fishing business no less profitable than the PBTF
“This hurt the feeling of our people,” Japanese Foreign Minister Fumio Kishida was indignant in August 2015 when Russian Prime Minister Dmitry Medvedev flew to Iturup, the largest island in the Kuril range. Medvedev visited a youth forum on the island and toured the newly built Yasny airport and one of the many fish processing plants. The head of government was accompanied by Oleg Kozhemyako, acting governor of the Sakhalin region, and Alexander Galushka, head of the Ministry for the Development of the Far East. The list of high-ranking officials was missing one person – Sakhalin Oblast Senator Alexander Verkhovsky, nicknamed “The Master of the Kurils”.
Having arrived in the Kurils back in the mid-1980s, Verkhovsky from Leningrad created a multimillion-dollar business on the islands, about whose ownership Russia has been arguing with Japan for years. Verkhovsky’s holding company, Gidrostroy, built much of the infrastructure on Iturup: roads, hospitals, kindergartens, including the Yasny airport, at a cost of almost 6 billion rubles. The main investor was the state, which has been financing programs to develop the Kuril Islands since the mid-1990s. From 2016 until 2025, a new program worth 80.9 billion rubles (the federal and regional budgets pay 61.1 billion rubles) is in effect.
In parallel, Verkhovsky successfully developed the fishing business (it has always been an important part of programs for the development of the Kuril Islands). Today the ex-senator (his powers in the Federation Council expired last year) is the largest fisherman in the Far East. The Sakhalin Island company, which is part of Gidrostroy, became the owner of 96.38% of shares in the Preobrazhenskaya Trawl Fleet Base (PBTF), one of the largest fishing companies in Primorsky Krai. The terms of the deal had been under discussion since at least 2016, and the former owners of the FTB were considered to be relatives of Sakhalin Governor Kozhemyako: his wife Irina Gerasimenko, sister Olga Kravchenko, and son Nikita. They also, according to SPARK data, own shares in the companies which are part of the Salmonica Group (Tymlatsky Fish Factory, Marine Resources, Ozernovsky Fish Factory No. 55 and Rybholkam). It is unknown whether these companies were included in the perimeter of the deal with Gidrostroy. Salmonica’s business is comparable to that of the FCTF: according to Forbes calculations, the total revenue of the group’s companies in 2016 was almost $150 million. FCTF sales for the same year amounted to $103 million (the calculations were based on SPARK data and the average dollar exchange rate for 2016).
Kommersant’s sources in the fishing industry estimate the value of the PBTF at $430 million – almost four times the revenue. What is the reason for such a high price? As the interlocutor in the fish market told Forbes, the cost of fishing companies is calculated based on the volume of fishing quotas assigned to them. Companies are most expensive when they only receive their quotas. This year ten-year quotas are coming to an end, and the process of signing new 15-year contracts has already started.
The quantity of quotas for Gidrostroy will be known in autumn when the Federal Agency for Fisheries plans to finish the campaign for their distribution. This year the purchase of the FCTF made Verkhovsky the biggest fish trader in the Far East and the second biggest in the country. According to Forbes calculations, the volume of Gidrostroy’s quotas (including the FCTF) for 2017 exceeds 400,000 tons (mostly pollock). The market leader, Vitaly Orlov’s company Norebo #121 has 437,800 tons. The revenue gap is bigger – however, already in 2016 Gidrostroy was the second in this indicator among the Russian fishing companies. At that time Forbes estimated the revenues of the holding’s companies at $334 million against Norebo’s $756 million. There is no more recent data on the companies. The revenue of PBTF for 2017 amounted to $111.5 million (all calculations are based on SPARK data and the average dollar exchange rate of the respective year).
Verkhovsky does not own Gidrostroy alone. This year, he gained some influential partners. Businessmen and longtime associates of Roman Abramovich #17
Efim Malkin and Irina Panchenko now own 50% of Poronai, which, according to Forbes, accounts for 20% of the quotas and revenues of the fishing companies that are part of Gidrostroy. This year, the “master of the Kuril Islands” entered Forbes’ rating for the first time with an estimated fortune of $500 million. Will it change after the purchase of the FCTF? At the time of writing, Verkhovsky’s representatives were not able to find out whether the coastal company was bought on its own or borrowed funds (this information is necessary to assess the fair value of the business).