If you can’t beat ‘em, join ‘em and um… buy a large chunk of ‘em just to be on the safe side. That seems to be the philosophy behind behind emerging markets internet giant Naspers’ decision to buy an 18% stake in Russian rival Avito.
According to Reuters, the deal is worth US$50-million and will see Naspers merge its Slando and OLX Russian units into Avito in a bid to create a much more powerful presence in what is Europe’s largest online market. In fact, TechCrunch reckons the deal will make Avito the world’s third-largest classifieds site.
“The rationale for this transaction was to create a stronger market player in the high-growth Russian classifieds market, in which we’ll have a significant minority stake,” Naspers spokeswoman Meloy Horn said on Tuesday.
The deal reportedly values Avito at US$570-million and, according to the Financial Times, will give the group a 25% share of the burgeoning Russian classifieds market in terms of traffic and a 15% share in revenue terms.
“Classified works well because of the urban concentration and lack of retail services in the regions,” de Rycker told the Financial Times. “We like the model because once you are number one it has a snowball effect–it’s really a winner-takes-all market.”
Avito says it has more than 30-million monthly unique visitors buying and selling everything from cars to real estate, planned to use the proceeds to gain a bigger share in its key Auto and Real Estate classifieds categories. The company’s co-founder and Chief Executive Jonas Nordlander said Avito aimed to be the most liquid online player in a market where he expected further consolidation.
The Russian space is seriously hotting up, with companies like Yandex and Mail.ru grabbing international headlines on a regular basis. Naspers itself is hardly a stranger to the Russian scene. It has a large share in Mail.ru Group, giving it a number of indirect stakes tech companies throughout Eastern Europe and the West.