Page 8 - bne_Tech_12_2020

Leaders
December 2020 www.intellinews.com I Page 8
Initial trading was delayed for a few hours on the NASDAQ exchange, meaning Russian investors, where Ozon has a secondary listing, were first
to pile in, pushing the ruble share price up by more than a third. It was the first chance Russia’s swelling cohort of retail investors had to snap up the shares, as Russian regulations prohibited non- professionals from taking part in the IPO itself.
When trading got underway on the NASDAQ later Tuesday evening, Ozon’s shares immediately leapt 40% to stand above $42 a share.
Ozon raked in more than $1 billion from the IPO and a simultaneous private share sale to long- time investors Baring Vostok and Sistema. It is expected to put to use expanding its logistics network. That is more than double the firm’s initial plans when news of the IPO was first announced earlier this year.
By 21:40 Moscow-time, shares had slipped back slightly to stand just under $41 — an increase of 35% on the IPO price.
Ozon’s ADRs have also been introduced on the Moscow and St. Petersburg exchanges.
On the footsteps of Amazon
Founded back in 1998 as an analog of Amazon – at that time, an online seller of books and CDs – Ozon progressively enlarged its assortment. Over the years, Ozon’s growth required considerable investments – in particular, to develop one of the largest warehousing and logistic networks in Russia.
Ozon thus became the most well-funded independent e-commerce company in Russia, securing five funding rounds in the past ten years:
• $100 million in 2011;
• $150 million in 2014;
• $92 million in 2018;
• $154 million in May 2019;
• $150 million in March 2020.
The latest round involved existing investors Baring Vostok Capital Partners – whose founder US citizen Michael Calvey is still facing dubious criminal charges in Russia – and Sistema’s corporate fund, as well as Princeville Capital,
a new investor. This US VC firm brought one third of the funding, marking the first significant involvement of a US investor in the Russian digital space since 2013.
Earlier this year Ozon reportedly discussed with Sber, the state-controlled financial and technological giant, yet another investment deal. The talks stalled, however, which probably triggered Ozon to accelerate its IPO plans.
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 — thanks in part to the coronavirus pandemic — with GMV surging 188% year-on-year in Q2 2020, or 152% during the first half of this year.
However, but unsurprisingly, Ozon conceded 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