Naspers Takes Control of Russia's Avito in $1.2 Billion Purchase

  • Africa's biggest company raises stake in Internet group to 68%
  • Sees significant growth in Russian online advertising market

Naspers Ltd. agreed to buy a majority stake in Russia’s largest classifieds site Avito for $1.2 billion as Africa’s biggest company increases its exposure to the country’s online-retail market even as the economy remains in turmoil.

The media group will increase its stake in Avito to 68 percent from 17 percent, Cape Town-based Naspers said in an e-mailed statement on Friday. Stockholm-based Kinnevik is selling its 31 percent stake in Avito for $846 million as part of the deal, the Swedish company said. Naspers also owns a 29 percent stake in Mail.Ru Group Ltd., Russia’s largest operator of social networks.

“The Russian e-commerce market is expected to grow significantly, with more people gaining online access,” Naspers Chief Executive Officer Bob Van Dijk said. “Over time, e-commerce ratios should move in line with other large countries.”

Naspers, the owner of Africa’s biggest pay-TV service, has expanded through acquisitions of stakes in early-stage technology companies in emerging markets around the world. The company owns a 34 percent shareholding in Tencent Holdings Ltd. of Hong Kong, which at about $61 billion accounts for almost all of the South African company’s market capitalization, and has said it’s looking at more opportunities in the Internet advertising and e-commerce markets.

‘Huge Deal’

“This is a huge deal given an economic slowdown in Russia,” Konstantin Belov, an analyst at UralSib Capital, said by phone. “Still, Naspers is operating on emerging markets and is probably more resilient to Russian risks than other investors. It may consider further integration of its Russian assets.”

There are no plans to merge Avito with, Naspers spokeswoman Meloy Horn said by e-mail. “ has a strong focus on communications and entertainment, while Avito is a pure marketplace where people transact for their mutual benefit,” she said.

Naspers shares gained 1 percent to 2,001.48 rand as of 11:09 a.m. in Johannesburg, the highest since April 13. The company is valued at 841 billion rand ($63 billion). Kinnevik stock rose as much as 5.5 percent, the most since Feb. 12, and traded 5.4 percent higher at 271.3 krona in Stockholm.

Avito allows customers to buy everything from TVs to sofas and cars and is thriving despite a squeeze on Russian consumer spending as shoppers seek out cheaper deals. With about 26 million visitors in July, Avito is among the the country’s top-10 most popular websites, according to researcher TNS. Russia’s economy has been hit by falling crude oil prices and the devaluation of the ruble.

Avito is prepared for a possible initial public offering, the company’s Swedish Chief Executive Officer and co-founder Jonas Nordlander said earlier this month. The company has adapted internal controls and procedures to meet listing requirements for larger markets, including the U.S., he said.

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