Naspers said on Friday that it is investing almost US$1.2-billion (about R16-billion) to buy an additional 29.1% stake in Russian classifieds business Avito, taking its ownership to 99.6% on a fully diluted basis. The acquisition is being done through its subsidiary, OLX Group.

The investment gives Avito an implied enterprise value of almost $3.9-billion (about R52-billion).

Avito is the leading online general classifieds and property platform in Russia. The remaining shares are held by management.

“Avito is the leading online classifieds player in Russia and our decision to increase our stake reflects our belief in the long-term prospects of this great business and the Russian Internet market,” Naspers CEO Bob van Dijk said in a statement after markets closed in Johannesburg on Friday.

“This investment further strengthens our global position in online classifieds, a core focus for Naspers alongside online food delivery and fintech.”

Naspers first invested in Avito in 2013.

“Over the last five years Avito has established leading positions in five key categories: goods, autos, real estate, jobs and services,” Naspers said in the statement. “With 10.3 million daily unique visitors, Avito now attracts a large portion of the Russian Internet population every day.”

Strong revenue growth

In the first half of the 2019 financial year, Avito increased revenues by 31% to $162-million. This was “driven by enhanced product features, strong vertical traction and working closely with professional advertisers”. It also generates “robust” profit margins, Naspers said, without elaborating.

“Avito’s talented management team, led by CEO Vladimir Pravdivy, has demonstrated the capacity to achieve remarkable growth consistently over time,” said OLX Group CEO Martin Scheepbouwer.

“Business performance is excellent and we look forward to continuing this trend by further leveraging the technology, knowledge and experience from Avito within OLX Group and vice versa.”