Holding Mail.Ru Group has closed the sale of Russia’s largest portal for job search, HeadHunter, reported the Internet-company reporting by the end of 2015. This information was also confirmed by the representative HeadHunter Ivan Tutungi.
The buyer was a group of investors led by direct investment Fund “Elbrus Capital”, the transaction amount is 10 billion rubles, said in a release Mail.Ru Group. The deal was closed on 25 February. The entire amount will be paid in two instalments: the first, to $ 5.5 bn, already obtained in Mail.Ru Group, the second, in the amount of 4.5 billion rubles will be received until April 30, 2016.
The HeadHunter belongs to the largest Russian recruiting portal hh.ru and website Career.ru. In addition, HeadHunter managed the recruiting direction of the holding Mail.Ru Group — “Работа@Mail.ru” (the portal will remain under the control of HeadHunter after separation from Mail.Ru Group, said General Director HeadHunter Michael Zhukov in conversation with ).
The protracted deal
Mail.Ru tried to sell the asset in to the Fund “Elbrus Capital” in autumn 2014, but in April of last year told investors that the deal fell through. “Elbrus Capital” was unable to raise money in the West for investments in Russian assets in the conditions of difficult political relations between Russia and the West, told me a year ago, a source close to one of the parties to the transaction. In the fall of 2014, the parties discussed a potential transaction on the same HeadHunter for 10 billion rubles.
In the fall of 2014, in fact, completely changed the structure of the pool of potential buyers, in addition to “Elbrus Capital” includes Russian and foreign funds, said managing partner of “Elbrus Capital” Dmitry Kryukov. The original agreement with Mail.Ru Group was signed in November 2014, and the deal had to close in February 2015. However, in December 2014 fell sharply, the ruble, and foreign investors that were part of the syndicate, decided not to participate in the purchase of the asset. Almost a year left “Elbrus Capital” on the search for new partners on the transaction. According to “Vedomosti”, one of the investors was the Bank Goldman Sachs.
Natalia hodjaeva, CEO of the competitor hh.ru portal Superjob.ru considers the final amount of the transaction “fairly modest”. “But it is quite clear: the economic situation in the whole market now is not in favour of the seller,” she says.
“HeadHunter — ruble asset, they hardly changed the level of revenue and EBITDA for those two years that negotiations for the purchase, so has not changed and the price,” explains managing partner “Elbrus Capital” Dmitry Kryukov.
HeadHunter revenue in 2015, down 1.5%, to 3 billion rubles, EBITDA fell 2.5%, to 1.5 billion rubles.
HeadHunter, being a non-core asset within Mail.Ru Group, have evolved, analyst FK “Opening” Alexander Vengranovich. Therefore, the asset sold with a much smaller ratio to EBITDA (6.6 to EBITDA for 2015) than all Mail.Ru Group. The deal is beneficial to both parties: the HeadHunter will be able to develop in the framework of “Elbrus Capital”, and Mail.Ru Group will have sufficient cash to repay the remaining debt at “Vkontakte” and by the end of 2016 to begin paying dividends, Vengranovich.
Mail.Ru Group took out a loan from Gazprombank in the amount of 22.2 billion rubles for the purchase of 48% of social network “Vkontakte” the Fund UCP. As at 31 December 2015, the size of the unpaid debt was $ 6.9 billion rubles, said in the company’s annual report.
The prospect for HeadHunter
Private equity Fund “Elbrus Capital”, according to information on the company’s website, “advises private equity funds on investments in companies in the markets of Russia and CIS countries and strive for further growth”. Its founders are former managing Director “the Renaissance the Capital” Dmitry Kryukov, the former President of investment company A1 (enters into a consortium “alpha-Group”), Alexander Savin and managing a Dutch Private Equity Fund Waterland Robert Tilin.
The size of the Fund is $550 million, but, as hooks explains, “Elbrus Capital” invests a large amount of money in assets single-handedly, and tries to attract partners. In January 2015 he, along with a consortium of investors became the owner of 27% of the company “CYANOGEN Bands”, which controls the service to find housing Cian.ru. The package price was not disclosed.
According to Kryukov, the purchase of two major assets on the market online classifides in Russia (CYANOGEN — in real estate and HeadHunter — recruitment) does not mean that the company is going to merge into a single business online classified. “We look at the growing sector where you can create valuable business assets, classifide we seem to be in this sector,” he explains.
HeadHunter is one of the largest online resources to find work not only in Russia but also in Ukraine, Kazakhstan, Belarus and Azerbaijan. The website is ranked third in the world in attendance among resources in the category “Work and employment”, according to Similarweb. In January 2016 users has caused hh.ru 33.2 million visits.
General Director HeadHunter Michael Zhukov said that the company is “excited” about the deal with “Elbrus Capital”, as a new owner interested in increasing business value through the development of its technological component. In the short term HeadHunter may develop including through acquisitions of other companies. Specific names of Zhukov to lead did not, but suggested that this may be the first acquisitions for technology. HeadHunter plans to invest in technologies of machine learning and other areas.
“Elbrus Capital” has long-standing relationships with Mail.Ru Group. In 2007, about 5% Mail.Ru Group (then it was called Digital Sky Technologies) has acquired the Renaissance Private Equity Fund. In 2009 Kryukov and his partners bought the “Renaissance” of the Fund management company. Along with it they got and the assets, including Mail.Ru Group. After group restructuring, the share of “Elbrus Capital” in Mail.Ru eroded to less than 1%.
Since 2007 the Foundation has conducted more than 70 deals. Except Cian.ru a portfolio of “Elbrus Capital” includes a provider of services to financial and HR outsourcing in Russia and CIS Intercomp, network medical clinics of “national medical network”, the operator of broadband access to the Internet “Strela Telecom”, service, rental stain-resistant carpets and clothing Blesk InCare, service, Express delivery SPSR-Express, online marketplace B2B-Center. “Elbrus” is a media asset packages in Media-1 TV (television is a co-owner of UTH Russia holding, managing broadcasting channels and Disney), shares in the group “Choose the radio” (owns regional radio stations).