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Ozon raises record-breaking $150 million round

0 30 April 2014

Online retailer Ozon has secured a record breaking $150 million investment from Russian conglomerate AFK Sistema in return for 21.6% of the company. The deal was based on a $694 million valuation of the project.

Half of the money comes from Sistema itself, while the other half has been put up by Sistema’s daughter company MTS, a mobile network. Sistema and MTS have both received 10.8% stakes and their representatives have been added to Ozon’s board of directors. 

This $150 million round means that Ozon has regained the record for the Russian e-commerce market. It held the record from late 2011, when it raised a $100 million round, until June 2013, when this total was surpassed by a $130 million investment in Lamoda

Sistema’s interest in Ozon has been known since late 2013, when it was revealed that the holding company, which is among Russia’s top-10 firms by revenue, was in discussions with majority shareholder Baring Vostok. At the time, it was reported that Baring, which originally acquired 51% of the company for just $3 million in 2000, planned to make a full exit. It hoped to sell out at an $800 million+ valuation, but that was clearly considered too much for a company that turned over $747 million in 2013. This may have influenced Baring’s decision to remain the major shareholder in the project. 

While Ozon will direct the funds towards improving the 5 companies controlled by the Ozon Group (general retailer Ozon.ru, shoe retailer Sapato.ru, travel agent Ozon.travel, online store-creator OZON solutions and delivery service O-Courier), MTS hopes to use its partnership with Ozon to build its own online store. To start with, the companies are currently finalising a joint venture to sell smartphones, tablets and domestic electronic appliances. 

Describing the deal, Sistema’s President Mikhail Shamolin said that

“Sistema’s investment in Ozon represent an excellent way in to Russia’s fast growing e-commerce market. With 16 million users, Ozon is a very well known brand with a loyal client base, a growing range of products and a leading logistics platform. Our investment, in addition to financial benefits, promises to allow Sistema’s other portfolio projects the chance to establish mutually beneficial partnerships”.

Sistema, which only invests in companies worth more than $300 million, owns children’s retailer Detski Mir and Intourist, a hotel chain, and also has significant interests in the oil and gas industry. You can see its whole portfolio here.

Russian e-commerce continues to grow at an impressive rate. According to a recently published report, it was worth $13.4 billion in 2013, a 34% increase on 2012. While the sector remains focused on Moscow and St Petersburg, which respectively bring in 40% and 9% of total revenue, there are clear signs that it is catching on in Russia's regions too. 

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