Sistema_VC increases stake in Ozon to leverage Russia’s e-commerce boom
Sistema_VC, Sistema’s fund focused on investment in growth-stage tech companies, has become the third largest shareholder of Ozon, Russia’s leading online retailer, after having acquired 7% from other investors, bringing the fund’s stake to 16.3%. Sistema also retains exposure to Ozon’s growth story through its portfolio company MTS which owns a 18.7% stake.
Ozon aims to become Russia’s leader for online retail. According to Ozon’s CEO Alexander Shulgin, the company’s business is growing at 70-80% annually, but has the potential to grow at over 100%. He added that investment into logistics infrastructure would contribute to Ozon’s development, eliminating the only limitation to faster growth. Alexey Katkov, Managing Partner at Sistema, overseeing the activities of Sistema_VC, noted that Ozon had every opportunity for unprecedented growth and that he was glad the fund increased its stake in the asset.
Research by the Russian Association for Electronic Communications (RAEC) suggests that the Russian market for e-commerce grew by 16% y-o-y and amounted to RUB 2 tn in 2018, with Ozon and Wildberries providing for two thirds of the market growth. UBS expects Russia’s e-commerce market to grow at a CAGR of 15.4% in 2018-2022.
In its report on Runet Economy RAEC also noted that the number of orders placed with Russian online retailers was up 2.25 times of the past five years. Electronics and home goods were in the lead among product categories, while food, beauty, health and DIY saw the fastest increase in the number of orders.
Ozon is also an active player on the online travel market. Ozon.travel has been on the market for over nine years and processes over 2 million orders a year. The online travel segment of e-commerce continued its growth in 2018, despite a growth rate slowdown. RAEC’s preliminary estimates suggest that the segment would grow by 8% and total at RUB 670 bn in 2018.
About Sistema_VC: The fund was established by Sistema in 2016 and is focused on the Russian and CIS markets with the prospect of becoming a global VC player. One of the fund's co-investors is Sberbank. In 2017, Sistema_VC maintained its strong position in the Russian market and won the national award Venture Investor 2017 in the category “Discovery of the Year”. The fund’s key investments are: Ozon, leading online retailer, VisionLabs, experts in computer vision and machine learning, YouDo, online marketplace of consumer services, MEL Science, a start-up offering monthly subscriptions to chemical experiment kits, Luden.io, developer of virtual reality games and Segmento, platform which employs machine learning to targeted digital advertising.
About Ozon: Established in 1998, Ozon’s is now Russia largest multi-category online retailer, carrying over five million goods in 23 categories and serving three million customers annually. The company employs over 4,000 people and operates warehouse facilities with a total area of over 70,000 sq m in Moscow, St. Petersburg, Tver, Ekaterinburg, Kazan and Krasnodar. The company’s General Director Alexander Shulgin joined Ozon in December 2017 after six years as at Yandex, where he oversaw the company’s IPO on NASDAQ as CFO, and was appointed General Director and COO in 2014.