Russian Internet company MAIL.ru makes a splash on the London Stock Exchange and shows the Russian internet scene is coming of age.
MOSCOW, RUSSIA. REUTERS -Just over a month after announcing its listing price on the London Stock Exchange (LSE) would be placed at 27 dollars and 70 cents - at the top of its range, shares in Russian internet company Mail.ru were trading 14 dollars higher on December 8th marking a fifty percent rise.
Further proof that Russia's internet scene is coming of age.
Mail.ru made a big splash when it began trading on the LSE in November, increasing initial share price from 27.70 USD to 35 USD on the first day of trading. Its initial public offering valued this seventh largest of international Internet businesses, and the biggest company in Russian-speaking Internet markets, at 5.71 billion USD.
The unusual debut underscores the importance of the company in Russia and has analysts talking.
"In fact, it's the first Russian company of that scale that came to the London Stock Exchange and attracted such big investment, at least in the Russian Internet or media sector," said Vladimir Kuznetsov, equity analyst for UniCredit Securities.
Mail.ru estimates its sites reach approximately 70 percent of Russian Internet users every month. Speaking at the recent Silicon Valley comes to Oxford event, Index Ventures partner Saul Klein commented on why Mail.ru had proved so popular in its London debut.
"Russia is one of the biggest internet markets on the planet, period. It's one of the top five internet markets in terms of scale. They are the dominant internet company on the consumer side in Russia. We're, at Index, invested in Ozon which is the Amazon of Russia. There are two or three companies in Russia that are super dominant and in a huge market," he said.
The Internet company operates two of the three largest Russian language online social networking sites, 'Odnoklassniki,' or 'Classmates,' and 'Moi Mir,' or 'My World,' and runs Russia's two largest instant messaging networks; its leading e-mail service and second largest Internet portal; and the largest online games platform in the country.
These holdings are important, as Russians on average spend almost 11 hours a month on social media websites, more than twice the American and global averages.
Kuznetsov said investors, impressed by the numbers of potential users and the company's stakes in Facebook and similar Russian social site vKontakte could keep the company's good fortune going.
"It's possible that we won't see such big growth in the future, although it's still going up now, without significant corrections. But the [trading] volumes are not so big. It was obvious in the first days, that investors who bough Mail.ru to speculate, bought and left the first day, having gotten a 30 percent profit. Now, long-term investors are interested in the shares," he said.
But, Kuznetsov said, Mail.ru will have to do more than just attract new users.
"Probably the most important thing is to see how they are going to monetise their users. Because the user itself doesn't bring anything before he starts buying any additional services for example, he sends virtual gifts to other users," Kuznetsov said.
Following its Initial Public Offering (IPO), Mail.ru became Europe's largest internet business.