Yesterday the Emerging Europe Growth Fund II (EEGF II), a mid-cap private equity fund managed by Kyiv (Kiev)-based Horizon Capital, announced the acquisition of a stake in Rozetka, a leading Ukrainian e-commerce company.
The financial details of the deal were not disclosed, but speculations appeared in the media that Rozetka’s valuation could amount to anything between $200 and $700 million, and that the fund may have acquired an up to 15% stake.
Rozetka is No. 207 in the Internet Retailer Europe 500, with 2014 online sales of 85.0 million euros, down 1.13% from the prior year, according to Internet Retailer estimates.
The Ukrainian online retail market reached some $1.6 billion last year – loosing ground in US dollars but up 10% in one year in local currency, according to a recent report by industry association UADM in partnership with Ukraine Digital News.
“This market still retains significant upside potential as Internet and e-commerce penetration rates remain substantially lower than regional peer levels,” Horizon Capital notes.
“Led by visionary entrepreneurs, Vladyslav and Iryna Chechotkin, Rozetka has superior brand recognition, top quality service and high customer satisfaction levels. It is is the most popular Ukrainian e-commerce site,” the fund stated, citing GfK Ukraine data.
Rozetka allows online shoppers from all over Ukraine to purchase a variety of goods and services, from laptops and smartphones, to toys and fishing rods, to train and airline tickets.
The site had never raised venture money so far, Horizon Capital’s press service told Ukraine Digital News.
Good news for the industry – and for the country?
Very few significant venture deals took place in the e-commerce segment over the past year. In September 2014, giant investment firm CIG injected $2.5 million in groceries delivery company Zakaz.ua.
Horizon Capital’s move could mark the start of a more favorable period, believes Dmitry Lisitsky, the CEO of online marketplace All.biz.
“This [deal] is important, [because] Horizon is a big investor – they’ve been on the Ukrainian market for many years and they understand what’s going on here,” Lisitsky told the Kyiv Post.
“Apparently, this fund has high expectations about the macroeconomic indicators of the country – Rozetka can’t be successful if the entire country is in crisis.”
“All Ukrainian e-commerce projects have seen their valuation jump [with this deal],” Lisitsky added.
The deal with Rozetka is the first investment of Horizon Capital in the e-commerce segment, the fund’s press service told Ukraine Digital News.
Horizon Capital is a private equity fund manager that originates and manages investments in mid-cap companies in Ukraine and the region. Currently, Horizon Capital manages three funds, Emerging Europe Growth Fund II (EEGF II), Emerging Europe Growth Fund (EEGF) and Western NIS Enterprise Fund (WNISEF), with over $600 million under management.