South Africa's Naspers has inked a deal to buy a majority stake in Russian online classifieds platform Avito in a transaction that provides first exit for Swedish investor Kinnevik from its fairly aggressive bet on internet businesses around the world.
Naspers already owns 17.4 per cent in Avito and is hiking its holding to 67.9 per cent by acquiring shares held by other shareholders for $1.2 billion. Bulk of the stake is to be acquired from Kinnevik, which would sell its entire 31 per cent stake for $846 million.
Kinnevik, together with Vostok Nafta, Filip Engelbert and Jonas Nordlander, co-founded Avito in 2007 and has since then participated in every subsequent funding round.
Over the last eight years, Avito has expanded both organically and through local mergers with Naspers- controlled OLX and Slando in 2013, which brought in the South African media and internet firm as its shareholder.
Since then the company expanded into classifieds verticals and is now also a leading player in five key verticals: general goods, auto, real estate (including Domofond), jobs and services.
With around 35 million unique monthly visitors and 8.6 billion monthly page views, Avito is one of the top 10 websites by traffic in Russia. For FY2014 the company reported revenues of $76.5 million (up 76 per cent year on year) and an EBITDA margin of 50.6 per cent.
The deal values the firm at $2.7 billion including $240 million cash in its books.
For Kinnevik, the transaction represents the first material realisation of the SEK 20 billion it has invested in digital consumer services companies since 2007. The transaction implies a SEK 4.18 billion uplift versus its recorded fair value as at June 30, 2015, and a SEK 6.65 billion gain from Kinnevik's total investment of SEK 438 million, both as at September 30.
“With a return exceeding 16 times our invested capital, the transaction also delivers significant value to Kinnevik's shareholders,” said Lorenzo Grabau, CEO of Kinnevik.
Kinnevik owns 21 per cent stake in Indian classifieds venture Quikr besides 26 per cent stake in Global Fashion Group, a holding company of Rocket Internet incubated fashion related online ventures including India's Jabong.
For Naspers, the transaction strengthens its position as a key global player in online classifieds.
Naspers’ CEO Bob van Dijk said: “The Russian ecommerce market is expected to grow significantly, with more people gaining online access. Over time, ecommerce ratios should move in line with other large countries.”
More than half of Avito’s traffic is now coming from mobile devices, compared with 32 per cent at the beginning of 2014.
Avito’s management will remain invested in the company.
Naspers is also an investor in Flipkart and runs online travel agency Goibibo besides Ibibo, the Indian bus ticketing venture it acquired two years ago.
Not so quick, Quikr not yet a 'unicorn'
Indian classifieds venture Quikr that neared the billion dollar valuation mark early this year and indeed claimed to have hit the milestone, seems to be still a distance from becoming a 'unicorn', the coveted club of startups commanding value of over $1 billion.
In its latest disclosure Kinnevik, one of the key investors in Quikr, has reiterated that the latest deal in July this year where it invested more to buy additional stake valued the firm at $900 million.
A Quikr spokesperson refused to comment on the valuation citing company policy.
Earlier, Kinnevik had told VCCircle that Quikr is not valued lower than what it was earlier this year when it last raised fresh capital.
Quikr is creating separate verticals for its classifieds business including one for housing and has been in talks to buy some existing players in the business such as CommonFloor. Quikrhomes competes with the likes MagicBricks, 99acres and PropTiger, among others.
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