VKontakte CEO Sells Stake to Billionaire Usmanov’s Partner

VKontakte founder Pavel Durov sold his 12 percent stake in Russia’s largest social network to billionaire Alisher Usmanov’s partner Ivan Tavrin, 29-year-old Durov said on his webpage yesterday.

Tavrin, who is chief executive officer of Usmanov’s wireless operator OAO MegaFon (MFON), told Bloomberg today in an interview he will manage the stake independently from Usmanov-controlled Internet holding Mail.ru Group Ltd (MAIL), which already owns 40 percent of VKontakte.

“I bought the stake as I believe in the future of this company,” Tavrin said, declining to comment on any financial details of the transaction.

VKontakte may be valued at about $2.5 billion, making Durov’s stake worth $300 million, said Ksenia Arutyunova, an analyst at Rye, Man & Gor securities. The social network was valued at $3 billion to $4 billion, Vedomosti said yesterday citing unidentified people.

Durov said on his webpage he isn’t leaving VKontakte and will monitor the quality of its service.

VKontakte had 95 million users in December, including 61 million in Russia, researcher comScore estimated. This compares with 13 million Russian users of Facebook Inc. and 54 million users at Mail.ru’s social network Odnoklassniki, comScore says.

Durov played a crucial role in creating and making Vkontakte the largest social network in Russia, said Anna Lepetukhina, analyst at Sberbank CIB.

“He created a mix of a social network and a video-site where people don’t just chat, but spend a lot of time watching movies and listening to music. However, he cared about audience, not monetization.”

Profit-Oriented

His exit may make VKontakte more profit-oriented, Lepetukhina said. Usmanov’s employees have this month been appointed vice president in charge of monetisation, chief financial officer and head of investor relations at VKontakte.

United Capital Partners led by entrepreneur Ilya Sherbovich holds the remaining 48 percent. UCP hasn’t been seeking control of VKontakte, but is interested in boosting the social network’s value and may consider selling its stake in the future, spokeswoman Nafisa Nasyrova said by e-mail.

Usmanov controls Russian wireless operator OAO MegaFon and Mail.ru which runs Odnoklassniki social network. Usmanov was an early investor in Facebook Inc. (FB) and has a stake in Chinese online retailer Alibaba Group Holding Ltd. He is the Russia’s richest man worth $19.2 billion, according to Bloomberg Billionaires Index.

To contact the reporters on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net; Yuliya Fedorinova in Moscow at yfedorinova@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net; John Viljoen at jviljoen@bloomberg.net

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