Qiwi’s Visa-Linked Wallets Spur 56% Post-IPO Jump on Growth Bets

Qiwi Plc, a Russian electronic payment service backed by billionaire Alisher Usmanov, has surged 56 percent since its May initial public offering as investors bet the industry is poised for growth.

Qiwi is posting the top performance after Tableau Software Inc., a U.S. provider of digital-charting tools, among 15 companies that sold at least $200 million of shares since May 1. The rally outpaced a 2.8 percent drop in the Bloomberg Russia-US Equity Index of the most-traded Russian stocks in the U.S. The gauge rose 0.6 percent yesterday to a seven-week high of 91.15. Qiwi gained 1.5 percent to $26.52.

The company operates more than 165,000 cash-collecting terminals and kiosks where customers can make deposits, double the number of automated teller machines and terminals run by OAO Sberbank, Russia’s biggest lender. While Usmanov’s Internet holding Mail.ru Group Ltd sold $60 million of Qiwi shares in the IPO, Chief Executive Officer Sergey Solonin has held on to his 25 percent stake, citing the potential for growth as it expands Qiwi Wallet accounts co-branded with Visa Inc., which enable merchants to accept electronic payments.

“The company will continue to grow,” Solonin, 39, said in an interview at Qiwi’s office in Moscow on July 16. “This is a unique product. There are no direct analogies because of our product mix, chain effect of the terminals, our presence both in the physical space and online.”

Visa Co-Branding

Qiwi, created in April 2008 and registered in Nicosia, Cyprus, enables merchants to accept payments from as many as 65 million customers a month, according to the IPO statement. It has 13 million Qiwi Wallet accounts.

“Investors began putting their cash in when they realized what our product was,” Solonin said. “This is a completely new theme, there aren’t clear comparisons with other companies. Many investors took the time to find out how our terminals work, what is a wallet and why it’s rising in popularity.”

Google Inc., the world’s most popular search provider, is reconsidering or has abandoned projects to broaden the appeal of Google Wallet, the mobile software that allows users to pay for purchases online and in stores with their phones, more than half a dozen people close to the company who asked not to be identified because the plans are private, said last month.

Qiwi Accounts

EBay Inc. reported first-quarter revenue that missed some analysts’ estimates in April as growth slowed at its PayPal unit. PayPal’s sales increase decelerated to 18 percent in the first quarter from 32 percent a year earlier. The online-payment unit took in less money per transaction, hurt by an economic slowdown and weaker currencies in Europe, EBay said.

Qiwi’s adjusted net income in the first quarter more than tripled from a year earlier to 455 million rubles ($14 million), according to a June 4 statement. The number of active Visa Qiwi Wallet payment accounts -- which customers use to pay for their mobile phones, cable, airline and train tickets or settle e-commerce transactions -- jumped 49 percent, Qiwi said.

Qiwi’s earnings before interest, taxes, depreciation, and amortization will surge 39 percent this year, according to the average estimate of five analysts surveyed by Bloomberg.

“The Qiwi Visa wallet unit has generated more than 100 percent growth in payment volume in each of the past three years,” David Koning, an analyst at Robert W. Baird & Co. in Milwaukee, Wisconsin, who rates the stock the equivalent of buy, said by e-mail yesterday. “We expect growth to remain strong, but it is difficult to sustain 100 percent growth. We model more than 50 percent growth for full-year 2013.”

Russian Rivals

WebMoney and Yandex.Money are the biggest rivals for Qiwi in Russia, Boris Kim, the chairman of Qiwi’s board of directors, said in an interview yesterday. Sberbank completed the acquisition of almost 75 percent of Yandex.Money for about $60 million this month.

Qiwi operates in eight countries, including Brazil, Jordan, and Kazakhstan, according to the company’s website. Qiwi’s terminals are used in 11 countries, including China and Argentina, under franchising agreements.

Yandex NV, the owner of Russia’s biggest online search engine, has gained 14 percent since May 2, while Mail.ru has advanced 10 percent in London and OAO MegaFon, Russia’s second-largest wireless carrier, rose 11 percent.

The benchmark Micex Index gained 0.3 percent to 1,414.10 by 2:59 p.m. in Moscow, while the dollar-denominated RTS Index added 0.3 percent to 1,372.51. The RTS Volatility Index, which measures expected swings in futures, rose 4.5 percent to 24.87 today.

Futures on the dollar-denominated RTS Index added 0.5 percent to 137,210. The Market Vectors Russia ETF rose 0.9 percent to $26.90 yesterday.

United Co. Rusal, the world’s largest aluminum producer, was unchanged at HK$2.90 in Hong Kong trading. The MSCI Asia Pacific Index was little changed.

Before it's here, it's on the Bloomberg Terminal.