Бизнесмен Вадим Ермолаев
Новости Резонанс

Closed-cycle businessman

ЕрмолаевThere are several places in Dnipro where you can easily meet one of the richest inhabitants of the city Vadim Ermolaev — the central synagogue and the two largest centers built by Ermolaev himself: «Most-City Center» and «Cascade-Plaza».

«He personally checks how cars are parked near them, or the cleanliness and well-being of adjoining territories», — says Dnipro businessman Andrii Zdesenko.

Ermolaev can afford himself to walk without security: hardly anybody knows how he looks like. A 45-year-old businessman, whose fortune Forbes estimated in $ 185 million, hasn’t given a single interview for his entire life. Ermolaev answered the questions of Forbes in writing. The history of his business we reconstruct mainly from the stories of employees, partners,  and acquaintances of an entrepreneur.

Chemist

In 1987 Ermolaev finished vocational training school of local domestic department –popularly it is called «culinary school». He didn’t obtain a higher education, though got engaged in business. In the early nineties, he was hauling cigarettes, alcohol, washing powders and shampoos from Bulgaria and Turkey. The money for the first purchases Ermolaev lent, but having earned decent money, he opened his own wholesale warehouse. «Then Dnipro was the wholesale trade center for imported consumer goods in Eastern Ukraine, — says Ihor Hut, who is of Dnipro descent and who was involved in trade at that time. — Entrepreneurs from neighboring regions used to come with trucks to those bases, load and pay cash».

In 1995, Ermolaev and his junior partner Stanislav Vilenskii set up the Alef Corporation. «At the time it was quite the thing — the word «corporation», — explains Ermolaev. Meanwhile, Sergii Kasianov and Valerii Kiptyk, also of Dnipro descent, founded the corporation «Olvia», and Valerii Shamotii — the corporation «Logos». All these companies traded imported consumer goods and were competitors.

Upon an initiative of Kasianov, Alef and Olvia joined their forces in 1997. «Vadim was the best at transport, logistics, customs clearance, and we were handling distribution,»- as Kasianov recalls. He was in charge of sales in the joint business, Kiptyk, and Vilenskii — in finance.

At about the same time, the partners, according to Kasyanov, privatized the shop at the Khimprom plant (in Pervomaisk, Kharkov region), where popular washing powders Lotus and Dana were produced in the USSR. Dnipropetrovsk restructured his debts and resumed production. «We knew how to promote such products: we had the best dealer network,» Kasyanov said.

Around the same time, the partners, according to Kasianov, privatized the shop at the «Khimprom» plant (in Pervomaisk, Kharkov region), where popular in the USSR washing powders «Lotus» and «Dana» were produced. Businessmen restructured its debts and restarted production. «We knew how to promote such products: we had the best dealer network,» — said Kasianov.

Thousands of Ukrainian businessmen came all the way from importers to manufacturers in the second half of the 1990s. The founders of «Alef» and «Olvia» weren’t spared as well. Gala soap and powders of the Turkish holding company Baser claimed a significant share in the sales of both companies. Kasianov was well acquainted with the owner of the holding Mustafa Basher. Seeing that Gala products are being sold better than «Lotus», Ukrainians decided to organize production. In 1999, together with the Baser they set up the joint venture «Olvia Beta» and began to build a plant in Ordzhonikidze Dnipropetrovsk region. In total, the partners invested in it $25 million. The Turks had 50% in the joint venture, the tandems Ermolaev — Vilenskii and Kasianov — Kiptyk 25% each. According to Yermolaiev, Turkish partners were responsible for the strategy and operations management, while the Ukrainian ones — for logistics and sales.

Ukrainian-made Turkish detergent went with a bang. Seeing this, Ermolaev in 2002 launched in Dnipro a plant for the production of cardboard packaging «Lunapack», the main consumer of which was «Olvia Beta».

Products under the trademark Gala practically repeated the product line of Procter & Gamble, only it cost several times cheaper. With the advertising slogan «Why Pay More!» in three years, «Olvia Beta» has taken over a third of the market of detergents and has got very close to the leader — P&G.

This was a valid argument for Basher during negotiations with a multinational company. In 2004, P&G bought a plant in Ordzhonikidze. According to the Dnipro businessman, who is familiar with the terms of the deal, the plant cost $150 million.

Winemaker

In the midst of 1990s, Alef imported popular in the former USSR Bulgarian wines and cognacs. As in the case of household chemicals, Yermolaiev started producing cheaper domestic analog. In 1999, Alef opened a winery in one of the regional centers of the Dnepropetrovsk region. His equal partner in this project was the Dnipro second-rate businessman Felix Chertok. «We were offered a very good price for old premises that were suitable for our own production», — explains Ermolaev.

Unlike Gala washing powders, the wine «Zolotaya Amphora» didn’t have the call. Consumers doubted the quality of the drink poured in the center of the country. No advertising helped. Correction of the errors needed. Alef’s alcohol business 2000-2003 bought three wineries in Crimea and planted 2000 hectares of vineyards.

Since then, «Zolotaya Amphora» was sold as «the wine of the Crimean valleys». In addition to it, Alef started to produce wines under the famous Bulgarian trademarks «Tamianka», «Bear Blood», «Monastic Hut». The plant in Dnepropetrovsk region eventually concentrated on the bottling of vodka.

In 2001, Ermolaev and Chertok set up production of cognac «Klinkov» in Crimea, which was advertised as the author’s product of the Bulgarian technologist Radostin Klinkov. «Klinkov» should have been perceived by consumers as an affordable substitute for Bulgarian cognac and competed with the products of the Tavriia plant, built during the Soviet era, owned by that time by the «Logos» of the Dnipro citizen Shamotii.

Out of all the pseudo-Bulgarian drinks, Ukrainians tasted only «Tamianka». It was Shamotii’s turn to copy Ermolaev’s products. In 2004, Logos started bottling «Zolotaya Tamianka» in Dnipro with a label resembling Ermolaev’s Tamianka. Ermolaev’s institutions sued and won it.

The Ermolaev’s company also offered a cheaper analog in the vermouth segment. Since 2003, Aleph has begun ordering vermouth at one of the Italian factories and selling it in Ukraine under the Trino brand. In parallel, one of the Alef structures was the exclusive distributor of Martini. «We noticed that on the Ukrainian market, there is a need for cheap, but high-quality vermouth, and tried to occupy this niche», — says Ermolaev. «We did not compete with the Martini brand because they are both in a different price bracket.

However, Bacardi-Martini Group didn’t appreciate Ermolaev’s plan: they did not like the market appearance of cheap Italian vermouth in Ukraine. In order not to lose the right to exclusive distribution of Martini, in 2006 Ermolaev shifted production activities of vermouth to Crimea.

Investor

Ermolaev tried a variety of industries. One business entailed another. Starting with the corn market, he engaged in its cultivation, the import of agricultural machinery and the production of mineral fertilizers. Carried away by the development, the businessman not only created his development company but also organized the production of concrete, building stone and window systems. In order to reduce logistics expense, he set up a transport and shipping company; for purposes of settlement center of the group Agrobank has emerged. «Ermolaev is a systemic businessman», — characterizes him Genadii Korban. «He’s trying to lock everything»

«Ermolaev is a born marketer who sees opportunities in the market well», —  says co-owner of retail chains Eva and Varus Ruslan Shostak.

The only business, in which Ermolaev failed, was retail one. He tried to develop a network of shops in Dnipro selling household and interior goods, but the project was shut because it was unprofitable. In the first half of the 2000s, for the short time, Ermolaev was one of the financial investors of the network of shops of the household appliance and electronic «ABV-Technika». During the crisis in 2008, the network bankrupted.

In 2006, Ermolaev took advantage of rising prices for financial assets and sold Agrobank to the Czech Home Credit Bank. Analysts estimated the deal in $ 40-65 million (three or four capital). According to Ermolaev, purchasers have advanced several requirements; one of them was «to take away bad loans». Among them was the debt of the Nikopol Pipe Plant that numbers UAH 12 million. Ermolaev’s structures have sued the plant for six years and in 2012 received his assets. «Now we have to manage it,» — as Ermolaev noted. With the new owner, the plant reopened.

Before the crisis, Ermolaev set up ActaBank. Unencumbered, it flourished: from the beginning of 2009, the size of the bank’s assets has grown 20 times and as of January 1, 2013, exceeded UAH 4 billion.

Developer

The proceeds from the sale of the bank money Ermolaev invested in commercial real estate. By that time he has already been a leading developer of Dnipro.

In the early 2000s, Ermolaev’s old friend Gennady Axelrod carried him away the idea of comprehensive development. «I wanted to improve the landscape of the central part of my native city,» – confides Ermolaev.

The landscape of the center was disfigured by a big unregulated market framed by tower-blocks, where during the Soviet era industrial enterprises and scientific research institutes were located. It was there where they had to rent offices to private companies.

Ermolaev wanted not just to erect separate tower-blocks. He was interested in building entire microdistricts. Mayor of the city Ivan Kulichenko says that Rabbi Shmuel Kaminetskii introduced him to Ermolaev.

«Yermolaiev was looking for a large site in the center, and the rabbi asked me to meet with him», — says Kulichenko. «I listened to him and stipulated one condition: the street would become a pedestrian boulevard, which can be called Ekaterinoslavskii». In such a manner Ermolaev obtained several hectares of land, where he built connected with a boulevard trade and office center «Bosphorus» and a mixed-use development «Cascade-Plaza with a total area of more than 150,000 m2.

Another gross lot Ermolaev got from Kulichenko with the condition to resettle 320 families who lived in single- and double-decker slums. «These were barracks and communal apartments», — recalls the mayor. — Without canalization, with an outhouse». Ermolaev cleared the site of shabby houses and built a new traffic intersection near it. The builders did not touch only one building — a small ancient synagogue. It was built in the modern shopping center «Most-City Center», which Ermolaev built in 2006 with a former partner in «Olvia Beta», Kiptyk.

By that time Korban became the main partner of Axelrod in construction projects. Ermolaev had a kind of competition with them: who would build better. «Of course, we all were rebuilding the center of the city not only from patriotism», Korban admits. «We understood that there are gold meters, which haven’t worked yet, and we did everything in the way that it was nice to walk near our objects».

Up to now, Ermolaev keeps a sharp lookout for how his objects look like. For example, after a walk on Ekaterinoslavskii Boulevard, he can call the tenant and ask him to change the summer platform. «Vadim is keen on his business and goes into such details that others with his status would not pay attention anymore», notes Zdesenko.

Out of the crisis that plagued the majority of Ukrainian developers, and put some of them on the verge of collapse, Ermolaev came out safe and sound. He was lucky to start 2008 with large-scale plans, but without large construction projects. Today he returns to projects stalled five years ago. Mixed-use development «Brama» with a total area of ​​more than 220,000 m2 includes two 54-storey towers, a skyscraper, a business center and a shopping and entertainment center. The first stage of this microdistrict is the shopping complex «Perekrestok» with an area of ​​more than 30 000 m2, the construction of which the development unit «Alef» will start in the spring.

You can easily meet one of the richest inhabitants of the city Vadim Ermolaev — the central synagogue and the two largest centers built by Ermolaev himself: «Most-City Center» and «Cascade-Plaza».

«He personally checks how cars are parked near them, or the cleanliness and well-being of adjoining territories», — says Dnipro businessman Andrii Zdesenko.

Ermolaev can afford himself to walk without security: hardly anybody knows how he looks like. A 45-year-old businessman, whose fortune Forbes estimated in $ 185 million, hasn’t given a single interview for his entire life. Ermolaev answered the questions of Forbes in writing. The history of his business we reconstruct mainly from the stories of employees, partners,  and acquaintances of an entrepreneur.

 

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