Naspers announced today a $1.2 billion transaction to become the largest shareholder in Russia’s leading online classifieds site Avito.ru — just weeks after the company aired its IPO plans. After buying shares from existing shareholders, Naspers will increase its stake from 17.4% to 67.9% on a fully diluted basis.
Kinnevik is selling its entire 31% stake to the South African giant for $846 million, and Accel Partner and Northzone are also fully exiting the business, Tech.eu has confirmed. The deal, which values Avito at some $2.7 billion, is one of the largest European VC-backed company exits ever.
Naspers expects to “strengthen its position as global leader in online classifieds.”
“The Russian e-commerce market is expected to grow significantly, with more people gaining online access. Over time, ecommerce ratios should move in line with other large countries,” said the group’s CEO Bob van Dijk.
“We believe this deal is mutually beneficial, and, from our perspective, we welcome Naspers’s very long-term view on Russia and especially on Avito”, says Filip Engelbert, CEO and co-founder of Avito, who will retain his position.
The transaction is still subject to approval by the competent South African authorities. The acquisition may initially be funded from Naspers’s existing cash resources and debt facilities, but the group stated that it is “currently evaluating suitable long-term funding alternatives” to avoid “increasing its existing debt profile in the medium term.”
A Russo-Swedish success story
One of the most successful Internet companies in Russia, Avito was founded in 2007 by Swedish businessmen Filip Engelbert and Jonas Nordlander. In 2011, Swedish investment company Vostok Nafta Investment, one of its early investors, called it the “real romance” of its portfolio.
In May 2012, Avito.ru secured $75 million from Baring Vostok Private Equity Fund IV and Accel Partners as well as from existing investors Kinnevik and Northzone.
In March 2013, Avito merged with its competitors Slando.ru and OLX.ru, creating the fifth most popular Russian website and one of the world’s top classifieds websites. As part of the deal, valued at more than $570 million, Naspers — which owned Slando.ru and OLX.ru — invested $50 million in cash into Avito in exchange for a stake in the new group.
Over the past years, the company expanded into classifieds verticals and now is a leading player in five verticals: General Goods, Auto, Real Estate (including Domofond.ru), Jobs and Services.
The platform kept growing amid the crisis that hit the Russian economy in 2014-2015.
The company reported revenues of $76.5 million for full year 2014, up 76% from the previous year, with an EBITDA margin of 50.6%, Naspers announced. In the second quarter of this year, Avito’s revenue reached 1.57 billion rubles ($24 million), up 47% in one year, Bloomberg reported.
By comparison, Avito’s revenues amounted to just $8.5 million in 2011. The company was then valued at $158.73 million, according to the financial reports of one of its shareholders.
TNS estimated Avito.ru’s monthly traffic at 25.7 million Russian users between 12 and 64 years of age in July 2015. More than 50% of Avito’s traffic is now coming from mobile devices, compared to 32% at the beginning of 2014, according to Naspers.
