Billionaire Alisher Usmanov’s USM Holdings Ltd. raised $532 million selling part of its stake in Mail.ru Group Ltd. (MAIL) for the first time after five years of building a holding in the owner of social networks and games.
USM’s unit Ardoe Finance Ltd. sold 15.5 million shares at $34.25 each, Morgan Stanley (MS:US), which organized the sale, said in a statement today. That represents a stake of about 7.4 percent in Moscow-based Mail.ru. The stock fell the most in five months.
Mail.ru shares had advanced 35 percent since the company’s 2010 IPO through yesterday, and Usmanov is selling at a time when the company faces slowing growth as the Russian Internet market is maturing. USM has no plans to reduce its stake further, Ivan Streshinskiy, the investment company’s chief executive officer, said in an interview.
“We sold part of Mail.ru ownership to recoup investments made to build the company’s stake since 2008,” Streshinskiy said by telephone. “We consider Mail.ru to be a strategic asset with big growth potential and don’t plan to sell any more.”
Mail.ru shares plummeted as much as 10.3 percent and declined 9.4 percent to $33.87 at 2:02 p.m. in London.
“The stake was sold quickly and unexpectedly which may mean that Usmanov needed cash urgently for some acquisition,” Alexander Vengranovich, an analyst at Otkritie Capital, said by phone. Usmanov told state television in December he planned to boost his stake in VKontakte, Russia’s largest social network.
Streshinskiy said the company didn’t need the proceeds to fund other purchases.
“It was all about recouping investments made in Mail.ru,” he said. “We have sufficient resources for any other investments,” Streshinskiy said, adding that there has been little progress in talks with VKontakte.
Mail.ru, the largest Russian-language Web company for games and social networks, raised about $1 billion in an IPO in London in November 2010. Usmanov didn’t sell shares then, instead using the exit by two of its co-founders to gain a voting majority.
After the sale, USM owns about 17.9 percent in Mail.ru and will be unable to sell additional shares for six months, according to yesterday’s statement. USM will keep control of voting rights in Mail.ru, the company said.
South Africa’s Naspers Ltd. (NPN) holds about 29 percent of Mail.ru, while China’s Tencent Holdings Ltd. (700) owns 7.8 percent, according to Mail.ru’s website. Its charter bans foreign shareholders from owning more than 45 percent of voting rights.
The Russian company said this week it will pay $899 million in special dividends after reducing its stake in Facebook Inc. (FB:US) and exiting investments in Groupon Inc. (GRPN:US) and Zynga Inc. (ZNGA:US) Shareholders as of March 20 will receive the payout.
“We picked a favorable moment for the sale following an announcement of strong 2012 results by Mail.ru and almost $900 million of special dividends,” Streshinskiy said. There was good demand for shares in the offering, with about a half of it coming from the U.K. and a third form the U.S., he said.
Mail.ru this week predicted 2013 sales growth of as little as 25 percent, down from 64 percent in 2010 as competition intensifies and most people in Russia already use the Internet.
Mail.ru paid a $795 million special dividend in August after selling part of its Facebook stake during the company’s IPO. In October, Mail.ru sold about $320 million in Facebook shares and now holds about 0.6 percent of the Menlo Park, California-based social-networking service.
Mail.ru also sold its 4.1 percent stake in e-commerce operator Groupon and a 1.2 percent stake in game developer Zynga during the fourth quarter.
USM is a newly created umbrella company, which holds assets of billionaire Usmanov and his partners. Usmanov, the 28th richest man in the world with a fortune estimated at $22 billion by Bloomberg Billionaires Index, owns 60 percent of USM, while Vladimir Skoch and Ardavan Farhad Moshiri hold 30 percent and 10 percent respectively.
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