Bloomberg News

Russia’s KupiVIP Seeking $125 Million in 2014 IPO, Founder Says

February 17, 2013

KupiVIP, the Russian online fashion retailer, is seeking to raise $125 million in an initial public offering next year to fund warehouse construction and expand delivery network, its founder said.

Goldman Sachs Group Inc. (GS:US) and Jefferies & Co. are among advisers KupiVIP has held discussions with about the planned stock sale in New York, though no mandate has been offered, founder and Chief Executive Officer Oskar Hartmann said.

KupiVIP started in 2008 helping fashion brands get rid of excess inventory with limited-time sales online, selling items such as a Valentino dress for $480 or Adidas shoes for $155. The company, which has almost 10 million users, is expanding into non-discounted retail with a new store, shoptime.ru.

“Russia is set to converge with the global trends in e- commerce,” Hartmann said in an interview in Moscow last week. “In five years, half of its 143 million population will be buying goods online.”

E-commerce in Russia has reached $12 billion, accounting for 1.9 percent of total retail sales in 2012, Morgan Stanley (MS:US) said in a report last month. Online sales are expected to grow 35 percent a year through 2015 as Russia catches up with western Europe in penetration, the bank said. Fashion may reach 25 percent of total e-commerce, Hartmann predicted.

“The major challenge for online fashion retailers such as KupiVIP is attracting new customers,” said Boris Ovchinnikov, a partner at Moscow-based researcher Data Insight. “They already gained most of the Russian audience eager to buy clothes online, and even their loyal customers are migrating to global online stores seeking cheaper prices.”

Vente-Privee

German-born Hartmann studied in the U.S. and worked in Russia as a business consultant before starting the company to mimic France’s Vente-Privee.

“I prefer calling it a business transfer,” Hartmann said. “Cloning is just a replication, while business needs to be transferred and adjusted for local factors, and that’s been driving progress for all economic history.”

Fashion, which accounted for about $1.5 billion in 2012 compared with $45 billion in the U.S., will continue to grow as a segment of Russian e-commerce, he said. KupiVIP’s revenue nearly doubled last year, Hartmann said, declining to elaborate.

Revenue in 2011 reached $160 million, according to Forbes magazine.

In the last two years, KupiVIP raised about $100 million in venture financing. Funds like Accel Partners, which invested in Facebook Inc (FB:US)., and Mangrove Capital Partners, which backed Skype, have put in money.

Germany’s Otto Group was the largest online fashion retailer in Russia in 2011, according to Data Insight.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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