Molotok.ru auction

The largest Russian internet auction Molotok.ru has found an institutional investor. That is the British company QXL Ricardo, providing internet auction services in 12 countries of the world. QXL Ricardo has acquired 30% in OJSC Molotok.ru, i.e. the company Molotok.ru was reoeganized into to conclude the transaction. Pavel Tokarev being the project manger since 2003 has retained his post. Dmitry Grishin, Mail.ru Director General and Arjan Bakker, responsible for QXL business in Eastern Europe have also entered the Board of Directors of the newly set up company.

Both parties are satisfied with the transaction. According to Mr. Grishin, Molotok.ru setting up a separate business and the institutional investor attraction might positively influence the project development and help it move to a new level. Molotok.ru is to receive active marketing support, which might help it attract new subscribers. According to the transaction terms, Mail.ru is to help the project attract new subscribers.

QXL Ricardo has got the opportunity to enhance its presence in the Russian market, considered one of the key ones by the company CEO Christian Unger. If Molotok.ru develops successfully then QXL Ricardo gets the right to get control over Molotok.ru, increasing its share up to 51%. Within the project strategic development Molotok.ru is to get the technical platform, developed by QXL, the company’s press release says, the project fundamental operation principles as an internet auction remaining unchanged.

Experts mention the investment is to positively influence Molotok.ru development, however QXL Ricardo profit is not evident. “If earlier the project was one of the many for Mail.ru, then now it has got the other status and is sure to be paid excessive attention, – Oleg Savtsov, RBC Soft Director General Deputy believes. – Additional financing might rather positively influence the project development”. However, Mr. Savtsov notes although Molotok.ru is the Russian C2C market leader, its leadership is rather precarious. “The project attendance and its popularity are not high. Having certain budget, it is not difficult to launch a similar product in the market and achieve similar results”.

The Investment Group Finam says the concluded transaction is rather successful for Molotok.ru, being actually forgotten and not developed for the last 5-7 years. Leonid Delitsin, IC Finam Expert-Consultant outlines the Russian internet users do not so actively participate in the internet auctions as those living abroad. “Another approach is to be applied to Russian users, so QXL Ricardo is to develop such an approach. But the mentioned task is sure to be of interest to the company, as the Russian market is the largest and rather attractive”, – the expert believes. Oleg Savtsov agrees to the given point of view, saying “the Russian users’ attitude to internet auctions differs greatly from that in the foreign market, the online auction regulations not having been formed yet”.

According to Mr. Savtsov Molotok.ru project total cost might come to $5-10 mln., if Mail.ru provides for the project promotion. So 30% is worth about several million dollars. Leonid Delitsin evaluation is more pessimistic, amounting to $1.5 mln, thus 30% amounting to $400-450 thousand.

Molotok.ru was launched in 1999. In spring, 2000 the internet auction developers netBridge and Comptek companies, possessing Yandex then, concluded a transaction, according to which Molotok.ru went to netBridge. In a year in February, 2001 netBridge and Port.ru (Mail.ru owner) merged together. After the merger on October, 15th, 2001 the joint company brand Port.ru was changed for more popular Mail.ru. Mail.ru current owners are the funds Tiger Global Management and Digital Sky Technologies, 30% belonging to Naspers. The newly set up JSC Molotok.ru shares were divided between the current Mail.ru shareholders. It is not informed whose share was sold to QXL Ricardo.

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