Page 113 - RusRPTDec18

domestic marketplace Beru. Previously Yandex.Market said it will focus on quality suppliers of foreign non-Chinese goods, with Bringly selling goods from Turkey, South Korea, China, Germany, Great Britain and Israel. The new addition to the Yandex.Market platform considers clothes and shoes, Korean cosmetics, and shock- and water-proof Chinese smartphones as the priority categories. "Cross-border sales are growing faster than the domestic e- commerce market in Russia and customers primarily buy goods from Chinese shops (90% of cross-border purchases, according to Yandex.Market)," VTB Capital commented on November 22. The bank sees the creation of a cross- border platform as allowing Yandex to cover the fast growing and popular (among Russian customers) segment of online consumption. However, the major player on this segment remains Chinese AliExpress. For Yandex, the main risks for the development of this platform are regulations (such as planned reduction in the free of duty threshold) and the complexity of fulfilling orders and logistics, VTB believes. Building up rivalry in promising Russian e- commerce market, in September Russian internet major Mail.ru, its shareholder mobile operator MegaFon, and the sovereign Russian Direct Investment Fund (RDIF) announced a strategic partnership with Chinese e- commerce major Alibaba. Alibaba Group will reportedly have 48% stake in the joint venture, MegaFon 24%, Mail.ru Group 15%, RFDI 13%. Alibaba will merge its existing Russian business AliExpress and Tmall with the new venture, and contribute investment. RFDI will invest up to $300mn. MegaFon will swap 10% stake in Mail.ru for the 24% stake in the joint venture. Another possible alliance of Alibaba is with Russia's second-largest bank VTB Bank, which could potentially tackle logistical challenges. VTB is affiliated with Russian Post that has just announced a number of measures to boost delivery infrastructure across 34 Russian cities and specifically with China.
Citymobil, a Moscow-based ride-hailing service, has closed the first round of investments, according to Kommersant. Mail.ru Group stake in the service is around 18%, lower than was initially announced in April 2018 (26%). In April 2018, Mail.ru Group and MegaFon announced their intention to participate in the investment round of Citymobil. The total amount for the investment round was USD 35mn, with Mail.ru Group planning to invest up to USD 12mn for a share of up to 26% and MegaFon planning to invest approximately USD 14mn for up to 31%. The plan was to use the investments for developing the service (including geographical expansion). According to Kommersant, the investments from investors other than Mail.ru Group have increased and, thus, Mail.ru Group’s stake turned to be lower than was initially announced. In the new ownership structure of Citymobil, Aram Arakelyan, one of the founders, and CEO, of Citymobil, and his partners, Hermalor Investments and WSFIS Global Opportunities fund own 12.13%, 37.53% and 17.08%, respectively, while Mail.ru Group and MegaFon have stakes of 17.65% and 15.61%, respectively. Bankers consider Mail.ru Group’s investment in the taxi service rather as experiment, and do not think that this change in Mail.ru Group’s stake in Citymobil changes the company’s valuation.
Russia's payment system Qiwi surprised analysts on the upside by posting an increase in revenues of 62% y/y to RUB5.2bn ($79mn) in the third quarter of 2018, beating consensus estimates by 10%. . Qiwi’s adjusted Ebitda was up 23% y/y to RUB1.6bn and was 13% above consensus expectations. Qiwi previously posted strong second-quarter results, but the margins continued to be pressured by new projects Sovest, Tochka and Rocketbank. In the third quarter, however, "Ebitda dynamics improved from previous quarters due to the growth of the high margin Payment Services business and a better performance from Tochka," VTB Capital commented on
113 RUSSIA Country Report December 2018 www.intellinews.com