Private Equity Russia

Alexander Samonov,  former co-owner of the supermarket chain “Kopeika” has announced that he is seeking investment and strategic partners for the creation of an investment fund for the construction of data centers in Russia.

Samonov has informed Kommersant that he will be investing $15 million personally and hopes to reach a total investments into the fund of $100 million.  They aim to secure an additional $100 million of debt financing.

They estimate they will be building around 6 data centers at planned financing levels.

Tencent Holdings Limited, owner of China’s largest instant messaging platform Tencent QQ, has invested $300 million in exchange for 10.26% of Russia’s Digital Sky Technologies (DST), owner of mail.ru and social network vkontakte.ru.  This investment values DST at $3 billion.

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Yuri Millner’s Digital Sky Technology has reportedly invested $4 million for a minority stake in Nival Network, the online gaming division company of Nival Group.  The company focuses on the increasingly popular browser-based gaming and massively multiplayer segments.   Established in September, 2008, the company operates its own Russian online gaming and social networking portal, ZZima.com.  Its portfolio includes titles as MMORPGs Cabal Online, Dragonica, Shaiya: Light and Darkness, Conquer Online and Eudemons, multiplayer racer Level-R, browser-based strategy game Khan Wars, music title Super Star and RockFree.  Nival Network owns development studios in Moscow (Russia) and Minsk (Belarus).

As part of the investment agreement, Nival Network will issue $7 million in new shares and the entire company will be valued at $32 million.  DST is purchasing 12.5% of the company for $4 million and the ownership stake of existing shareholders will be reduced.  1C, investing $1 million in the second round will be reduced from 30% to 26.56% and Talco Global (controlled by Nival founder Orlovskiy), will invest an additional $2 million and will be reduced from 70% to 60.94% .

DST and 1C have not officially commented on the terms of the deal to date.

[Via Vedemosti]

Tvigle.ru, the Russian online video content distribution, licensing and advertising company, is offering between 10% and 25% of the company to strategic private equity investors.  The owners are seeking a valuation of  owners are seeking is $45 million.

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Credit: Yevgeny Kondakov, Spiegel Online

Chatroulette founder Andrey Ternovskiy has announced that he will be visiting the US to meet with venture capital and private equity investors.

The  17-year old Moscow Internet sensation has already received an offer from Yuri Milner of Digital Sky Technologies (DST), Russia’s leading social media investment company. DST owns stakes in V Kontakte, Mail.ru and Facebook among others.

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Kommersant reported today that private equity groups Mangrove Capital Partners and ABRT Venture Fund are currently negotiating with LexisNexis and Proquest regarding the sale of Russian visual search provider Quintura.

Mangrove and ABRT have reportedly invested about $10 million into Quintura.  The funds are reportedly looking for a $50 million valuation for the company based primarily on its proprietary search technology and patents.  Annual revenues of Quintura are reportedly currently less than $500,000.

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The Harvest Greenfield Project is holding a 2 day working group and start-up contest under the auspices of Microsoft’s Biz Spark initiative on February 20-21 at Microsoft’s offices in Moscow.

The Harvest Greenfield Project was founded by Microsoft Biz Spark, with sponsorship and participation from Cambridge’s Judge Business School Center for Entrepreneurial Learning, Softline Venture Partners, Internet incubator Inventure, The Federal Agency For Youth Activities’ Zvorykinski Project, angel investor fund Addventure, and others.

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The FT published a piece today on technology venture capital in Russia, or the lack thereof. SQ7WHTXYZE6U

Several reasons were given for the current lack of activity in technology venture capital and private equity in the Russian market, including high risks, the lack of a technology focused exchange and the lack of stock options for managers.

Alexandra Johnson, of DFJ-VTB Aurora, specifically sited the lack of good managers.  Interestingly, Draper Fisher Jurveston‘s Russian JV partner VTB just announced a stock  option plan worth 1% of its shares for its own top managers.  It has yet to win the required state approval for the program, however.

Also name-checked were Web Media Group, which has invested $20 million in online properties, Digital Sky Technologies (of Russian social networking and Facebook fame) and Luxoft, Russia’s largest offshore programming outsourcer.

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The Russian online private fashion buyer’s club KupiVIP.ru has raised a $20 million third private equity financing round led by Accel Partners, representing the largest investment to date in a Russian e-commerce vendor.

Also participating in the round were existing private equity investors Mangrove Capital Partners, ARLAN, Direct Group and angel Oliver Jung, who participated in a $3 million round-one and $8 million round-two.

Launched just over a year ago, KupiVIP already has over one million registered members in its shopping club.

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Several sources this week are reporting the size of the Russian display advertising market grew 10% in 2009 to $261 million.  We’re not so sure.

The original story was pulled from a Feb. 2009 press release from Russian digital marketing agency AdWatch, which reported impressive 2008 growth in online ATL advertising to $207 million (35% over 2007).  The press release went on to  forecast 25% growth in 2009, which would bring the size of the market up to $261 million.

Our first reaction to this would be that 2009 probably didn’t go as planned.

That being said, global figures for online advertising were very impressive through Q3 last year.  After a rocky first half, revenues were up slightly, with a 5.4% drop in revenues y-o-y by the fourth quarter – vastly superior results to traditional advertising, which in some sectors fell as much as 30%.

We’re still waiting for reliable figures for the Russian market, but we’d hold off on declaring a banner year – similar performance to the US in this sector would suggest incredible resilience, though, and is something to keep a close eye on.

AdWatch was purchased for $20 million in a 2008 private equity transaction by Aegis Group plc and is now part of the Isobar online advertising network.