(RusBase) – Online retailer Ozon has secured a record breaking $150 million investment from Russian conglomerateAFK Sistema in return for 21.6% of the company. The deal was based on a $694 million valuation of the project.
Half of the money comes from Sistema itself, while the other half has been put up by Sistema’s daughter company MTS, a mobile network. Sistema and MTS have both received 10.8% stakes and their representatives have been added to Ozon’s board of directors.
This $150 million round means that Ozon has regained the record for the Russian e-commerce market. It held the record from late 2011, when it raised a $100 million round, until June 2013, when this total was surpassed by a $130 million investment in Lamoda.
Sistema’s interest in Ozon has been known since late 2013, when it was revealed that the holding company, which is among Russia’s top-10 firms by revenue, was in discussions with majority shareholder Baring Vostok. At the time, it was reported that Baring, which originally acquired 51% of the company for just $3 million in 2000, planned to make a full exit. It hoped to sell out at an $800 million+ valuation, but that was clearly considered too much for a company that turned over $747 million in 2013. This may have influenced Baring’s decision to remain the major shareholder in the project.
While Ozon will direct the funds towards improving the 5 companies controlled by the Ozon Group (general retailer Ozon.ru, shoe retailer Sapato.ru, travel agent Ozon.travel, online store-creator OZON solutions and delivery service O-Courier), MTS hopes to use its partnership with Ozon to build its own online store. To start with, the companies are currently finalising a joint venture to sell smartphones, tablets and domestic electronic appliances.
Describing the deal, Sistema’s President Mikhail Shamolin said that
Sistema, which only invests in companies worth more than $300 million, owns children’s retailer Detski Mir and Intourist, a hotel chain, and also has significant interests in the oil and gas industry. You can see itswhole portfolio here.
Russian e-commerce continues to grow at an impressive rate. According to a recently published report, it was worth $13.4 billion in 2013, a 34% increase on 2012. While the sector remains focused on Moscow and St Petersburg, which respectively bring in 40% and 9% of total revenue, there are clear signs that it is catching on in Russia’s regions too.
Source: RusBase | Author: Ben Hopkins