Japan-listed online services conglomerate Rakuten has continued its minority and majority equity investment strategy to build a global company by yesterday joining the consortium investing $100m in Russia-based internet retailer and travel company Ozon.ru.
The deal is the largest private investment in an electronic business in Russia and nearly double April’s $55m backing of online shopping club KupiVIP by a venture capital consortium of Balderton Capital, Bessemer Venture Partners, and Russia Partners.
Alongside Rakuten as new investors in Ozon.ru were venture capital firms Ru-Net, Index Ventures and Alpha Associates.
Ru-Net invested more than half of the $100m in Ozon having earlier in the week also backed the $60m creation of MJ in Vietnam. Ru-net is chaired by Leonid Boguslavsky, who founded system integrator LVS and sold it to accountants PricewaterhouseCoopers in 1997, and also owned a large stake in local search engine Yandex ahead of its flotation in the summer.
Intel Capital, the corporate venturing unit of US-listed chip maker Intel, had indirectly backed Yandex from April 2000 by investing in the Ru-Net Holdings fund managed by private equity firm Baring Vostok and local bank UFG. Ru-Net invested $5.3m for a 35.7% stake in Yandex and while Ru-Net’s other holdings, such as Ozon, were distributed to its limited partners, Yandex was maintained in the ongoing vehicle.
Ozon said more than $95m of the latest round went into the company through issuing shares, and the rest went to minority shareholders. Ozon.ru’s chief stakeholder, Baring Vostok Private Equity (about 60% before the deal), did not sell its shares, senior partner Yelena Ivashentseva told local news provider Moscow Times.
Ozon.ru was reportedly valued at more than $400m in the latest round but it was unclear if this was pre- or post-money. The company was advised by investment bank Morgan Stanley.
The new funds will be invested to improve Ozon‘s shipping and distribution system as well as to expand online travel site Ozon.Travel.
Ozon offers more than 1.5 million products across a broad range of categories to its more than 5.2 million registered members and revenues of a reported $135m last year.
Internet retailing sales in Russia grew by 22% in 2010 to reach R192.1bn ($6.5bn) and are expected to grow by a 14% constant value compound annual growth rate over the forecast period to reach R361.9bn in 2015, according to data provider Euromonitor International.
Hiroshi Mikitani, executive chairman of Rakuten, said: "Ozon.ru has built a highly successful e-commerce ecosystem and has focused expansion plans."
Rakuten said the deal underscored its "commitment to investing in promising e-commerce businesses and markets globally" having been founded a year before Ozon in 1997 and floated in April 2000 at the height of the first dot.com bubble.
In April, Tuniu, a China-based company providing online and call centre booking services for travel tours, raised $50m for its series C round from a consortium including Rakuten.
Other investors included venture capital firms Sequoia, DCM and Highland Capital.
Tuniu raised an undisclosed amount early last year and had its series A round from VC firm Gobi Partners in March 2009.
Rakuten has partnered, invested in or acquired similar online retailers around the world in the past two years, including a joint venture with China’s Baidu, acquiring Buy.com, Ikeda, Tradoria and PriceMinister in the US, Brazil, Germany and France respectively and with PT Global in Indonesia.