Avito.ru, Russia’s leading classifieds site by number of users, is merging with its competitors Slando.ru and OLX.ru, creating the fifth most popular Russian website, with more than 100 million page views a day, The Financial Times reported this morning.

As part of the deal, Slando and OLX will be folded into the Avito brand. The merged company is expected to hold a 25% share of the Russian classified market in terms of traffic, and a 15% share in terms of revenue, according to the British business daily.

Moreover, Avito will stand as the world’s third biggest classified website after Craigslist.org of the US and 58.com in China, the site’s owners told The Financial times.

Avito was co-founded in 2007 by Swedish businessmen Filip Engelbert and Jonas Nordlander. The site’s investors include three Scandinavian funds, Kinnevik, Vostok Nafta and Northzone Ventures as well as Russia’s Baring Vostok Private Equity and US-based Accel Partners.

Slando.ru and OLX.ru are properties of the South African holding company Naspers, which also owns a stake in Mail.Ru Group, a leading Russian Internet group.

As part of the deal, valued at more than $570 million, Naspers will be investing $50 million in cash into Avito, in exchange for 18.6% stake in the new group, The Financial Times reported.

“From a Naspers perspective the rationale for this transaction was to create a stronger market player in the high- growth Russian classifieds market, in which we’ll have a significant minority stake,” Naspers spokeswoman Meloy Horn said in an e-mail exchange with Bloomberg.  “Even though classifieds is still a young and unprofitable segment in Russia, we believe the sector offers an opportunity.”

A 20% reach

TNS last January estimated Avito’s monthly traffic at 21.6 million unique users aged 12–64 from Russia, reaching 20% of the total population in the same age group. The site’s daily audience exceeded 2.7 million users.

Avito claims that 140,000 people list items to sell on the site every day, 40,000 of whom have never listed before. One in five used cars in Russia is now sold on the site.

Avito generated $30 million in sales last year, up from $8.5 million in 2011 and some $1 million in 2010. In 2011, the company set for itself the long-term goal of reaching a $1 billion valuation.

Among the new group’s competitors are Irr.ru, the online arm of leading classifieds print publication “Iz Ruk V Ruki,” Delovoy Mir, a group that includes seven thematic online classifieds platforms as well as online and print advertising sales agencies, and eBay, which launched a free Russian language classifieds service two years ago.

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