Ozon, the leading multi-category e-commerce platform in Russia, filed today an amended version of the SEC registration statement for its NASDAQ IPO.
The company will go public at a valuation of $4.6 billion to $5.6 billion, Financial Times reports from unnamed sources “familiar with the plans.”
This is is more twice as high as the underwriters’ initial highest estimates, TheBell notes.
The amount to be raised was also revised amid strong demand: between $750 million and $1 billion, FT’s sources said, up from an initially planned $500 million.
The investor roadshow will start this Wednesday ahead of a possible flotation through listing American Depositary Shares (ADS) later this month, the sources told FT.
As previously reported, investors in Russia will also be able to trade some of the ADSs on the Moscow exchange.
Growth and losses
In 2019, Ozon’s gross merchandise value (1) amounted to 80.5 billion rubles ($1.25 billion at the average exchange rate of the year), up 93% from 2018. Growth has been accelerating this year, with GMV surging 188% year-on-year in Q2 2020, or 152% during the first half of this year.
However, but unsurprisingly, Ozon concedes in its IPO prospectus that it is “likely to continue to incur losses” as it continues to “invest in order to grow, and may not achieve profitability going forward.” The company, which is among the most well-funded tech companies in Russia, “may need to raise additional funds to finance [its] future capital needs.”
In the first nine months of 2020, Ozon’s losses reached 12.8 billion rubles (approximately $180 million at the average rate of the period). This considerable amount is explained essentially by the company’s investments in logistics, Ozon told EWDN. In the same period of 2018, losses were even higher, amounting to 13.0 billion rubles ($200 million).
Russian e-commerce on the rise
According to market research agency Data Insight, online sales of physical goods in Russia could reach 2.5 trillion rubles this year ($32 billion at the current exchange rate) and potentially some 7 trillion rubles (nearly $90 billion) by 2024.
“In addition to the vast room for structural growth in a market that has seen relatively low penetration and high fragmentation, Russian online retailers received an additional boost from the lockdown environment on the back of the Covid-19 outbreak this year” – and this effect could be long-lasting, believe Oksana Mustiatsa and Mikhail Terentiev, market analysts at Sova Capital.
“We think that Ozon, being the second largest multi-category e-retailer in Russia, is well positioned to benefit from these trends due to its rapid marketplace development (already over 50% in GMV reached in June) and the expansion of its logistics and fulfilment capabilities,” they told East-West Digital News in a recent exchange.
Russian IPOs on Western exchanges
Despite the unfavorable geopolitical context, several Russian digital companies raised substantial amounts on Western exchanges in the past years — or are considering doing so in the future.
The latest cases include HR platform hh.ru, which went public on the NASDAQ in June 2019; Yandex, which raised there $460 million in June 2020; and Mail.ru Group, which is about to raise $600 million on the London Stock Exchange.
Another Russian digital major, ivi.ru, is also eyeing a Western IPO. The company did not make official statements about it yet, but two bankers last month confirmed to Reuters that ivi was considering going public in the short term.
Yandex.Taxi, the promising ride-hailing company of Yandex and Uber, was actively preparing its IPO last year. The listing, initially scheduled for 2020, has however been postponed due to market conditions surrounding the coronavirus pandemic.
(1) GMV is the total value of orders processed through Ozon and revenue from services to buyers and sellers on the platform, excluding Ozon Travel. GMV is inclusive of VAT, net of discounts, returns and cancellations.
