Oktogo, a major Russian online travel agency and content portal, has secured $2 million from MCI Management, one the most established private equity group in emerging Europe.
The deal was revealed yesterday by Russian business daily Vedomosti based on exchanges with Oktogo’s CEO Marina Kolesnik and an MCI representative.
The funds will be used to develop Oktogo’s activities on the domestic market — the only segment that is still growing in the Russian tourism industry (+18% last year, according to state agency Rostourism), as outbound tourism has been falling sharply over the past two years due to the ruble’s depreciation.
Russia’s domestic hotel market essentially consists of independent players, and “it is a huge task to integrate them,” Kolesnik said.
Western and Russian funds have injected nearly $40 million in total in the company since its inception in 2010. The previous round, in December 2014, involved Mangrove (Luxembourg), Ventech (France) and ABRT (Russia). These existing investors injected $1 million in Oktogo, while new investor MCI invested nearly $4 million in exchange for a stake of less than 10%, according to Vedomosti.
MCI’s additional $2 million injection is coming as no surprise: it was announced as an option following the December 2014 transaction “depending on the future results of the company.”
Funding travel startups since 1999
Focusing on growth-stage investments in the CEE region, DACH countries (Germany, Austria and Switzerland), Russia and Turkey, MCI started to invest in online travel as early as 1999.
“We had a very positive experience from companies like TravelPlanet in Poland and Invia in the Czech Republic. Both companies delivered close to 10-times returns from initial investment. This is why we are so bullish about online travel.” MCI Managing Partner Tomasz (Janusz) Czechowicz said in an exchange with East-West Digital News last year.
“We believe that the Russian digital market – in particular, in the field of e-commerce – has a lot to offer regarding good quality companies at the growth stage with the potential to become national champions covering this hub e-commerce market,” the investor added.
MCI also invested in KupiVIP, Russia’s first flash sales site, and in Travelata, an online reseller of package tours.
