United Capital Partners agreed to acquire 48 percent of VKontakte from the co-founders of Russia’s largest social network, rebuffing efforts by billionaire Alisher Usmanov to gain control of the company, said two people familiar with the matter.
Chief Executive Officer Pavel Durov will retain a 12 percent stake in VKontakte after the fund’s acquisition from co-founders Vyacheslav Mirilashvili and Lev Leviev, the people said yesterday. They asked not to be identified before an announcement and declined to put a value on the deal.
Usmanov’s Mail.ru Group Ltd., which controls rival networks Odnoklassniki and My World, owns 40 percent of VKontakte and had sought to gain control of the company, efforts Mirilashvili and Leviev have opposed. VKontakte has 73 million users globally, including 42 million in Russia, according to researcher ComScore Inc.
VKontakte, based in St. Petersburg, was valued at $1.5 billion when Mail.ru bought 7.44 percent for $112 million in 2011. The company shelved a planned initial public offering last May, after shares of bigger competitor Facebook Inc. plunged following its IPO.
United Capital Partners Moscow-based spokeswoman Nafisa Nasyrova declined to comment on the sale yesterday as did Georgy Lobushkin, a VKontakte spokesman in St. Petersburg.
Mail.ru global depositary receipts fell 0.5 percent to $26.28 at 12:53 p.m. in London trading.
United Capital Partners, or UCP, is a Moscow-based fund with $3.5 billion of assets run by Russian banker Ilya Sherbovich and partners. Sherbovich, who has worked for Deutsche Bank AG, is a board member of OAO Rosneft, the world’s biggest publicly traded oil company.
“UCP probably aims to earn on reselling VKontakte shares in the future,” Alexander Vengranovich, an analyst at Moscow-based Otkritie Capital, said by phone. “A sale to a strategic investor would be more likely as an IPO may be a problem for VKontakte, given the abundance of illegal content on the site.”
VKontakte users in Russia spend an average of 8.5 hours a month watching video, according to ComScore. That’s because they can find almost any Hollywood movie for free, according to Internet Copyright Management LLC, a Moscow-based company that protects the interests of filmmakers.
The co-founders’ exit in favor of UCP “increases the chances that the VKontakte stake may be sooner or later resold to some strategic investor, including Usmanov,” Anna Kurbatova, an analyst at Moscow-based BCS Financial Group, said by phone.
Russia’s Investigative Committee, the main federal investigating authority in the country, will seek to question Durov as a witness to an incident on April 5 in St. Petersburg when a policeman was struck down by an unknown driver in a Mercedes-Benz, Sergei Kapitonov, a spokesman for the committee said today. Investigators have opened a criminal probe and are looking for the driver, Kapitonov said.
Vkontakte spokesman Lobushkin couldn’t immediately be reached by phone for comment today.