Holodilnik.ru, Russia’s leading online retailer of household appliances, has offered a minority stake to Media Capital in exchange for a large-scale advertising campaign. This is the first known media-for-equity deal on the Russian Internet market.
The transaction’s terms have not been disclosed, but a source close to the deal told leading Russian business daily Kommersant that Media Capital’s stake is “somewhere between a few percent and 10%,” while an industry expert estimated the value of the campaign at $10 to $15 million.
“We plan to scale up our activities to another level next year, which requires a massive advertising campaign,” Kommersant quoted Holodilnik majority shareholder Valery Kovalev as saying. “Our agreement with Media Capital will allow us to implement our strategic goal of increasing our market share without increasing our expenses.”
Like many other online retailers, Holodilnik.ru generates most of its sales in Moscow and St. Petersburg, leaving the potential of the regions largely untapped.
Little known in international business circles, Holodilnik is among the top Russian online retailers. With a turnover 8 billion rubles (approximately $260 million) last year, the site’s sales equalled or exceeded those of Ozon.ru, which foreigners often call the Russian Amazon, or of KupiVip.ru, the country’s largest flash sales site.
According to Anton Inshutin, a partner at InVenture Partners, Holodilnik’s valuation could be in the range of $100 to $120 million.
- RUSSIAN E-COMMERCE REPORT – The total volume of Russian online retail reached approximately $13 billion in 2012, up 25% from the previous year. EWDN has published an in-depth research on this industry, including case studies about retailers of all sizes. To receive free insights or to order the full version (2013 edition), please contact us at [email protected].
