Last week Mail.ru Group, the LSE-listed Russian Internet major, and Sber (ex-Sberbank), the state-controlled financial and technology giant, announced an injection of 12.2 billion rubles (around $170 million) into their O2O joint venture.
The latest capital increase brought the total amount they put in the JV this year to 43 billion rubles (around $600 million at the current exchange rate). The two partners still own equal stakes (45.01% after the latest capital injection).
O2O’s shareholders aim to “drive sustainable growth and continue to unlock new market opportunities within e-grocery in particular.” The latest funding will be used to develop further these assets, “including around technology and new hires.”
Mail.ru Group and Sber say they are “pleased with the progress made by the O2O JV since its formation in December 2019.” Gross GMV grew 13 times in 18 months — from 3.4 billion rubles in Q4 2019 to 45.1 billion rubles in Q2 2021 ($54 million and $609 million, respectively, at the exchange rates of these periods).
“Although the JV remains in an active investment phase, the shareholders are focused on growth and unit economics. The break-even across the main assets is anticipated within the coming two-three years,” reads Sber’s press-release.
This JV was created in December 2019 in order to develop assets in the fields of mobility (Citymobil, Citydrive, 2GIS), and foodtech (deliveries: Delivery Club, Local Kitchen, Performance Food, Samokat; restaurant selection: SberFood; restaurant accounting: R_Keeper).
“Since the market is still far from saturated, we have decided on a new round of financing. This investment will help us strengthen our position in the food and grocery delivery, as well as taxi and carsharing markets. By making our JV services faster and more convenient, technologically advanced, and intuitive, we will be able to provide our clients with new opportunities,” stated Andrey Vanin, senior VP and Head of the Directorate for Ecosystem Development at Sber.
“The pandemic has accelerated the ongoing structural changes and hence opened a much larger addressable market and with it growth and new areas of opportunity. In particular the long-standing cultural barrier around ways to consume food has largely been removed and users rightly are looking for the best possible speed and convenience around related delivery. Moving around in a safe and convenient way is even more important than in the past,” said Mail.ru Group CEO Boris Dobrodeev.
“The commitment of both main shareholders to build a leading local O2O player remains firmly in place,” he added, implicitly dismissing divorce rumors.
O2O’s main competitors are Yandex, a major provider of mobility and food tech services, and Delimobil, a major player on the car-sharing market, which has just filed for an IPO in New York.
