The Russian Internet M&A and private equity market is getting hot. Here is an overview of major deals that recently occurred.
The leading Russian online employment website HeadHunter and private equity investor Digital Sky Technologies each acquired 20% of Free-lance.ru, an online workplace for freelance specialists, for an estimated sum of $0.4 million. Free-lance has some 100 thousand registered users.
Digital Sky Technologies is a significant shareholder of Mail.ru. It sold a 15% minority stake in the company to Naspers of South Africa for some $85 million in January 2007.
QXL Ricardo, a leading pan-European online consumer auction provider, agreed to acquire a 30% stake in Molotok.ru, the leading online auction site in Russia, in exchange for US$ 1.5 million investment into the business. QXL Ricardo will also take over Molotok’s operations and IT systems. The remaining 70% of Molotok.ru is owned by the shareholders of Mail.ru. QXL Ricardo has an option to increase its stake to 51% depending on the future performance of the business. The deal values Molotok.ru at $5 million or some $10 per unique monthly visitor.
Alawar Entertainment, the leading casual games developer in Russia, said on its website that it raised an undisclosed amount from Finam, a Moscow-based financial services and investment group. The company will use investment proceeds to acquire game developers and for marketing purposes. According to Vedomosti business daily, Alawar was valued at $8 million prior to financing. Back in June 2005, Finam together with Norum acquired a 52% majority stake in Buka Entertainment, a leading PC game publisher and developer in Russia.
MumboJumbo a Dallas, Texas-based premium casual games publisher, bought out a Russian casual games developer Hot Lava. According to the Casual Games Association, 30% of the Top 10 games in 2006 were developed in Eastern Europe.
Rambler Media, the 2nd largest Internet group in Russia that is majority owned by media group Prof-Media, increased its stake from 25.1% to 51.1% in Begun, a leading Russian contextual advertising company, by excising its stock option and buying a 25% stake for $18 million from Finam. Rambler accounts for 20% of Begun’s revenues that were $9 million in first four months of 2007. As a result of the deal, Finam retains a 49.9% stake in Begun.
Marshall Capital Partners, a Moscow-based private equity firm, acquired a controlling stake in a sms-based content provider Nikita for over $10 million according to Cellular News. Niikita is the 5th largest mobile content provider in Russia and has a well-known consumer brand. Marshall also bought out two voice-based mobile content providers Solvo International in Moscow and Jump in Ukraine. The Ukrainian mobile content market is valued at $100 million in 2007.
Troika Capital Partners reportedly acquired a 40% stake in a magazine publisher GameLand for $12 million in a partial buy-out deal. GameLand publishes 17 gaming and life-style magazine titles with combined circulation of 1.3 million copies and reported turnover of $15 million in 2006. The Swedish-Russian private equity fund Mint Capital invested $2 million in exchange for 20% stake in GameLand in 2003.
Ekspress Group, the largest publishing company in Estonia, acquired the largest Baltic web portal Delfi for EUR 54 million. Ekspress Group reported turnover of EUR 94 million and net income of EUR 6 million in 2006. Delfi operates several consumer web portals in Baltic countries with total monthly visitors of 1.8 million and expects turnover of some EUR 7.5 million in 2007. The acquisition will help to transit Ekspress from a traditional media company to a new media one. The deal implied a multiple of 7 to Delfi’s projected annual turnover or some EUR 30 per monthly visitor.
Activist, a holding company for several Internet businesses that owns MasterHost, a leading Russian web hosting provider, acquired a web statistics service SpyLog for ca. US$3 million. The annual revenues of SpyLog are estimated at US$ 2 million.