Private Equity Russia

Russian private equity group Baring Vostok Capital Partners is rumored to be closing in on an acquisition of approximately 45% of Riki Group, the 100% owner of the children’s animation and products holding company Smeshariki.

Smeshariki, which began as a producer of children’s cartoons, has grown into a children’s entertainment and products empire consisting of 9 companies and employing more than 400 people.

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Swedish television broadcaster Modern Times Group AB (MTG), owner of the Viasat satellite TV network and 39% owner of Russian broadcaster CTC Media, has announced its private equity acquisition of 50% of the shares of Raduga Holdings, the operator of Russia’s pay-satellite-tv network Raduga TV from Contintental Media.

Terms of the transaction were not made public.

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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.