Naspers is becoming a majority shareholder in Avito, the top online classifieds platform in Russia, in a deal worth R16 billion ($1.2 billion).
The South African-based global Internet and media company says it is buying shares from existing shareholders to increase its stake from 17.4% to 67.9% on a fully diluted basis.
"As an early investor, we are excited about the long-term prospects of Avito. The Russian e-commerce market is expected to grow significantly, with more people gaining online access. Over time, e-commerce ratios should move in line with other large countries," says Naspers CEO Bob van Dijk.
Avito is Russia's largest generalist classifieds platform. Naspers initially invested in the company in March 2013 after merging its Slando.ru and OLX.ru platforms.
"Since then, the company successfully expanded into classifieds verticals and is now also a leading player in five key verticals: general goods, auto, real estate (including Domofond), jobs and services," Naspers says in a statement.
Avito is one of the top 10 Web sites by traffic in Russia, and has around 35 million unique monthly visitors and 8.6 billion monthly page views. More than 50% of Avito's traffic now comes from mobile devices, compared to 32% at the beginning of 2014.
JSE- and London-listed Naspers says the transaction "further strengthens its position as global leader in online classifieds and is a continued commitment to a very attractive business".
"This transaction will increase our exposure to the large-scale and attractive Russian online market, to the clear market leader in online classifieds and to a talented management team," according to Martin Scheepbouwer, CEO of Naspers Classifieds.
According to Reuters, Naspers is snapping up a 31% stake in Avito held by Swedish investment firm, Kinnevik, for $846 million.
Avito sees the deal as mutually beneficial and welcomes Naspers' "very long-term view on Russia and especially on Avito".
"Naspers has an impressive track record and we like their approach to business. Naspers is well known for trusting and supporting the management teams of the companies they invest in," says Avito co-founder and CEO Filip Engelbert,
The transaction is still subject to approval by anti-trust authorities and the South African Reserve Bank.
Naspers says the acquisition may initially be funded from its existing cash resources and debt facilities, but "the group is currently evaluating suitable long-term funding alternatives and does not envisage that this transaction will materially increase its existing debt profile in the medium term".
For the 2014 financial year, Avito reported revenue of $76.5 million, a 76% increase from the previous year, while the company's EBITDA margin was 50.6%. Avito's users post more than 500 000 new ads daily, with over 32 million overall active listings.
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