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bne March 2021 Companies & Markets I 13
bne:Funds
Russian message service Telegram hopes to raise $1bn with a convertible bond private placement
Ben Aris in Berlin
The super secure Telegram messenger service, developed by Russian-born software icon Pavel Durov, is looking to raise $1bn through a bond placement to a limited number of investors from Russia, Europe, Asia and the Middle East, the Kommersant daily reported citing unnamed sources on February 18.
The issue reportedly comprises exchange bonds that could be converted into equity in the messaging service that is currently 100% owned by Durov and his brother Nikolai.
Kommersant reports that the price of the conversion would be at a 10% discount to a potential IPO should it happen within five years.
The minimum bond placement is said to be set at $50mn, but could be lowered to $10mn. Five-year bonds could carry an annual coupon of 7-8%.
In Russia, potential investors have received offers to buy bonds from VTB and Aton, which are the financial agents for the Russian market, reports Kommersant. Aton declined to comment and VTB did not respond to Kommersant's requests for information.
Durov has already raised $1.7bn from the biggest ICO (Initial Coin Offering) in history to fund the development of his Telegram Open Network (TON) blockchain, but he later abandoned the project due to objections by the Securities and Exchange Commission (SEC), which said the sale of its GRAM coins was the sale of an unregulated security.
As bne IntelliNews reported in January, Durov was already in talks with potential investors to raise fresh investment capital using debt when the SEC ordered him to return $1.2bn of the $1.7bn he raised in the ICO by April this year, as reported by The Bell.
Investors are very keen to get their hands on Telegram’s equity as emerging markets (EMs) have seen a string of mega-IPOs in
After the US SEC ordered Telegram to pay back investors $1.2bn it raised from the world's biggest ICO the company is looking for investment, but is not in a rush.
the last six months and tech stocks are currently hot. Telegram is one of the few companies working in the social media sphere that remains 100% privately owned. At the moment Telegram makes no money at all, being privately funded by Durov and the capital he has raised.
Analysts surveyed by Kommersant believe that raising funds through an IPO would not be beneficial at this stage, as Telegram could monetise its services and improve on the $30bn that market participants currently estimate it is worth.
Exchange bond borrowing is common for venture deals with a small number of participants, but they remain rare for a Russian company.
Telegram on the rise
Telegram has been on something of a roll recently, as it is the service of choice for democracy protesters around the world from Hong Kong to Tehran, Minsk and Moscow.
Its privately owned status and Durov’s promise not to co-operate with governments’ security services and his lack of contact with Big Tech corporates has created a bond of trust between him and his users.
And in January the service got yet another boost after the popular messaging service WhatsApp – one of Telegram's main rivals – suffered from an exodus of users after it changed its terms of service. Media reports suggested the service would share its users’ data with its parent company Facebook. With more than 2bn users around the world, millions deserted the WhatsApp platform and the message service of choice they went to was Telegram: 25mn users downloaded the Telegram app in 72 hours alone.
Durov is also the author of the wildly popular VKontakte.ru (vk.ru), the Russian speaking world’s answer to Facebook, that was launched in 2006, and built Telegram while he was still running vk.ru.
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