Japanese holding company Mitsui & Co. has bought a 15% share in Qiwi, Russia’s leading operator of offline electronic payment terminals. Existing shareholders Mail.ru Group, the operations branch of DST investment, and Qiwi management both sold shares to complete the deal and now hold 21.4% and 63.7% respectively. No official information on the value of the transaction has been disclosed, but analysts estimate it to be worth $60–70 million.
Following the sale of shares, the shareholder agreement for the group was changed and now the adoption of decisions in most cases will require a 90% shareholder majority, with Mitsui & Co. and Mail.ru Group having veto rights.
Qiwi was established in late 2007 following the merger of OSMP and E-port payment systems. It dominates the market of offline electronic payment terminals – popular machines through which Russians pay for virtually everything from mobile phone bills to orders at e-commerce sites to utilities, taxes and fines.
In 2009, Qiwi’s revenues amounted to 6.1bn rubles ($199 million), with a net profit totaling 467 million rubles ($15 million). In addition to Russia, the service operates in 15 other countries, including China, South Africa, Romania and several former Soviet republics.
Russian payment terminals heading for U.S.?
“There’s a potential opportunity Qiwi can pursue even in the United States,” said Yuichiro Hanawa, general manager for Mitsui’s Internet business second department, to The Moscow Times. “Credit card payments are declining in the United States, so it would be logical to expand there. Based on my understanding of the market, why not?”
Mitsui & Co. is an international corporation operating in 66 countries around the world in a range of sectors, including financial services, consumer goods, chemical, automotive, shipbuilding, logistics, minerals, etc. In Russia, Mitsui has 9 subsidiary companies engaged in mining, mechanical engineering, car sales, delivery and maintenance of technological equipment and other enterprises.
Update Feb 25, 2011
Publication of the 2010 financial results for Mail.ru Group, an LSE-listed Russian internet group, has revealed the valuation of Qiwi under the group’s recent transaction with Mitsui.
Considering that Mail.ru Group sold a 3.74% stake in Qiwi for $24.1 million, the total valuation of Qiwi stands at $644 million.
However, such a valuation may be conservative, according to Vladislav Kochetkov, the president of Finam, a leading Russian financial company. Quoted by CNews.ru, a Russian online resource, Kochetkov noted that Qiwi’s valuation had been estimated at $773 million when Mail.ru Group prepared its IPO in late 2010. Such a difference might be compensation for the future strategic role of Mitsui in Qiwi’s international development, he added.
Source: CNews.ru
