Avito is trying to avoid the sale of VK

The main contender for the purchase of Avito ads service, one of the most profitable IT companies in Russia, is considered VK. But, as The Bell found out, the owner of Avito, the Dutch Prosus, is trying with all his might to find another, more distant buyer from the state. There are interests, but a little chance of selling someone else. The transaction with VK is supported by the presidential administration, and deputy Anton Gorelkin comes to the Avito itself with Avito itself.

What's happened?

In May, the Dutch investment company Prosus (part of the South African Naspers investmentchold) announced that she put up her Russian asset for sale-the Avito online service service. Prosus belongs to 100% of Avito shares. Last week, the media talked about the two main applicants for the purchase - VK and businessman Vladimir Potanin. Of these, the most likely buyer, two interlocutors The Bell then called VK.

But, as The Bell found out, the owner of Avito is trying to avoid a deal with VK and is actively looking for other buyers. This was told by six sources familiar with the course of negotiations.

How much is Avito

The main reason is money. Avito has always been one of the most profitable IT companies. For six months that ended in September 2021, the company's revenue increased by 67% to $ 313 million, and the profitability of sales amounted to 48%, follows from the last Prosus report. For the entire 2021, the revenue of the Russian legal entity of the service amounted to 42.6 billion rubles, net profit - 14.4 billion rubles.

VK for the transaction estimates Avito at 65-80 billion rubles or $ 1.2-1.5 billion at the current rate, says one of The Bell's interlocutors. Prosus, according to him, initially wanted to sell the asset much more - for $ 4 billion (about 213 billion rubles). Such a scatter is not surprising. For comparison:

• Back in May, Bloomberg, citing analysts, cited Avito at $ 6 billion (about 320 billion rubles at the current rate).
• According to the analyst of Raiffeisenbank Sergey Libin, Avito could cost 500-600 billion rubles before the “special operation”, after its beginning - 200-300 billion, and taking into account the recent initiative of the deputy Anton Gorelykin, no more than 100 billion.

The organizer of the transaction by the seller is Morgan Stanley, says one of The Bell's interlocutors. At first, several large Russian businessmen and companies received proposals for buying Avito, but none of them was ready to buy at such a price. It did not suit Vladimir Potanin, adds another source from among potential buyers.

Prosus is in a hurry to conclude a deal, but the company is not ready to sell cheaply, another interlocutor of The Bell argues: “They turned out to be hostages of their own profitability.” But $ 4 billion is no longer a market price, another source from among the applicants for the purchase of the service believes. “Based on the current market rating at 4-6 EBITDA, the company should cost between $ 1-2 billion,” he said.

The issue of price is still being discussed and early talk about specific figures, says another interlocutor The Bell, who knows about the progress of negotiations. According to him, on Avito "there are at least 2-3 potential buyers." Among them are “financial investors who are ready to redeem the asset.”

Another interlocutor The Bell on the market said that several funds are ready to unite in a consortium to compete for the asset. One of the major Russian funds confirmed The Bell his participation in the struggle for Avito.

“This is a big deal, and now few, except VK, can conduct it himself,” says one of the interlocutors. VK herself really wants to get out of this race as a winner - and puts pressure on the market.

Political argument

For VK, buying Avito is a fundamental question. Together with Avito, the buyer receives Cash Cow - an uninterrupted profit source, says The Bell's interlocutor in the market.

In addition, for VK this is a good opportunity to attract a new one and keep the old audience. In September, Avito had 92 million active users per month. The VK group itself recently overcame the mark of 100 million monthly users, the head of the company Vladimir Kiriyenko (son of the First Deputy Head of AP Sergey Kiriyenko) recently said at the PMEF).

VK will apply all its lobbying resource to win, all the interlocutors of The Bell in the market do not doubt. The deal is already actively supported by the presidential administration, three of them say. The last initiative of the deputy Anton Gorekina is associated with this in the market. In mid-June, he introduced a bill to the State Duma prohibiting foreigners to own more than 20% in Russian announcements of ads. The law was written specifically for Avito, Gorekin did not hide.

But the sale of VK for Prosus can be a problem. VK, the control over which from the end of 2021 is divided by SOGAZ Yuri Kovalchuk and Gazprombank, is closely connected with the state, and its CEO under sanctions. For Prosus, all this can be a problem. “This is a company with huge capitalization and assets trading in“ unfriendly ”countries,” explains one of The Bell's interlocutors. Avito top management can also be afraid of absorption by VK and loss of effectiveness, he said.

The position of the main shareholder on the transaction is finally unclear, the interlocutor, close to one of the applicants for the asset, states. Another does not exclude that the South African Naspers can still change his best to sell the asset - taking into account the fact that this country can be attributed to “friendly” Russia, it is impossible to exclude such probability entirely.

The VK representative refused to comment, Prosus and Avito at the time of publication did not respond to The Bell's request.

What am I to me?

IT companies watching the fight are sure that the market will suffer the most strongly from the sale of Avito VK-especially if non-market competition methods will be used in the future. If the VK does not put pressure on the market, there will be alternative customers at once, one of them argues.