Digital Sky Technologies (DST Global), Russia’s major Internet investment fund, pledged $50 million to Facebook’s latest $500 million financing round. In addition, DST stakeholder Goldman Sachs bought a $450 million stake with the right to sell up to $75 million to DST, according to sources quoted in The New York Times involved in the talks.
With this deal, Facebook’s valuation hovers at as much as $50 billion, according to calculations from The Financial Times.
In May 2009, the DST brought an initial $200 million investment to Facebook. The fund offered further financing and bought shares from the social network’s employees, bringing its total investment in Facebook to over $500 million and its stake to an estimated 10% by late 2010.
The fund has also invested $180 million in Zynga in December 2009. In April 2010 the fund led a $135 million investment round in Groupon and acquired ICQ from AOL for $187.5 million.
Before becoming a prominent international investor, DST established itself as the main financial player on the Russian-language Internet scene, mainly Russia and neighboring countries. The fund owns stakes, in particular, in Mail.ru, the leading Russian language email service and portal, Vkontakte.ru and Odnoklassniki.ru, the dominant social networks, Mamba, the leading dating site, Astrum Online Entertainment, the leading online game publisher, LiveInternet.ru, Free-lance.ru, Headhunter.ru as well as OSMP (aka Qiwi), Russia’s leading operator of offline electronic payment terminals.
Ironically, Vkontakte.ru (“In contact” in Russian) was designed as a Facebook clone when it was launched in 2006. Important differences distinguish the two sites now, but they still consider each other as competitors. This competition has become acute since Facebook launched its Russian-language version in 2008 and its first significant marketing campaigns in 2010, following the opening of its Moscow office. VKontakte, on its side, has had its interface translated into over 60 languages.
In September 2010, DST rebranded itself, giving its operational wing the name Mail.ru Group and calling its investment fund DST Global. Mail.ru Group includes a host of Russian-language sites as well as a fraction of DST’s stakes in international sites, including a 2.4% stake in Facebook.
In October 2010, Mail.ru Group began trading on the London Stock Exchange. The offering was oversubscribed by a factor of 20. This triumphant IPO provided the group and its owners with $912 million in liquidity and advanced its valuation to $5.71 billion based on the initial price. The IPO established Mail.ru Group as Europe’s largest listed Internet-related business.
Among DST founders are Yuri Milner, a former Soviet physicist turned banker, and Grigory Finger, who previously managed a leading western fund in Russia. DST’s main backer is Alisher Usmanov, a Russian oligarch of Uzbek origin who made his fortune in the 1990’s from mining, lumber and investment. According to the 2010 edition of Forbes magazine, Usmanov is the world’s 100th richest individual, worth an estimated at $7.2 billion.
Among other backers of DST Global and Mail.ru Group are Tencent Holding (China), Naspers (South Africa), Tiger Global as well as Goldman Sachs, to which DST is closely connected.
