Mikhail Prokhorov turns down Yo-cars project

Mikhail Prokhorov, a Russian billionaire, is looking for strategic investors. He is ready to sell the control shareholding of the Yo-mobile, Russia's first gas-electric hybrid car. The car is called "Yo" for the Russian letter "Ё" and it can use either gasoline or natural gas to generate its electric power.

The announcement about the first Russian hybrid was made in 2010. The members of the project conducted a massive advertising campaign for the new product and promised to assemble the first Yo-cars in 2012.

However, it transpired that Mr. Prokhorov was going to refuse from his widely advertised project. The participants of the project explained, though, hat they were looking for a strategic investor for the Yo-cars.

"The question about attracting debt financing is being considered because different financial institutions have made such offers. If the terms of such financing are attractive, the company will be ready to attract debt financing," an official statement from Yo-auto said.

Neither Yarovit (a holding working in the field of transport and energy machine-building) nor Oneksim Group are going to pull out from the Yo-mobile project. Oneksim owns 51 percent of the project, whereas Yarovit holds the remaining 49 percent.

The supposed volume of investments in exchange for Oneksim's control shareholding is evaluated at 115 million euros, Gazeta.ru website said with reference to an investment company that had become familiar with the terms of the offer. Two variants are being considered - common investment attraction and share sale, the source added.

Each of the two companies have invested approximately 150 million euros in the project. The construction of the Yo-mobile assembly plant was launched on the outskirts of St. Petersburg in June of this year. The majority of experts said that the investments made were not enough to start the production of hybrid cars from scratch. Many had doubts about the announced cost of the new car. It was said that the basic variant of the car would cost 360,000 rubles ($12,000).

The car will be equipped with climate and cruise control, GLONASS/GPS navigation system, LED lamps, multimedia system and 3G Internet. It will also be possible to connect USB and Bluetooth devices to the hybrids. Russian news agencies distributed a different price for the new car - "not higher than 500,000 rubles ($16,700).

"The innovative business in Russia is a very uncertain notion. That is why it is difficult to realize Prokhorov's ideas in the country. The oligarch may have problems in promoting his business because of political perturbations. Therefore, taking into consideration political and economic factors, one shall assume that it would perhaps be more profitable to implement the project abroad. The news messages about the search for external investors confirm the hypothesis about the possibility to relocate the business," Tatiana Sirenko, an analyst with Kalita Finance said.

It is not clear yet who is going to show interest in such a project abroad. Every large carmaker has its own hybrid projects. The Yo-mobile has nothing but the name, which has not become a brand yet.

Vitaly Salnik.