Russian state-controlled internet major VK (former Mail.ru) bought 70% in the Many Apps (Mnogo Prilozheniy) developer, which was among other projects one of the developers of the RuStore mobile app shop, according to Vedomosti daily.

The amount of the deal is not disclosed and the remaining 30% in Many Apps are held by Red_mad_robot digital business solutions developer. VK commented that the deal is aimed at strengthening the digital product development team. 

Notably, the deal could signal a new type of acquisition on the Russian market – aimed at buying ready-made teams amid severe qualified personnel shortages.

An IT market source familiar told Renaissance Capital that the "shortage of qualified personnel" was behind the VK and Many Apps deal, that "in this situation, attracting ready-made teams through the acquisition of an asset is a normal solution."

As followed by bne IntelliNews, after the military invasion of Ukraine, now state-controlled VK has started to shed assets, focusing on establishing domination in the Russian digital and social media space.

The company sold its market-leading gaming division and swapped its key foodtech services for media assets of another internet peer, Yandex.

However, the consolidation has had an adverse effect on VK's leverage. The company ended 2022 with a negative cash flow of RUB12bn (versus RUB4.5bn positive FCF in 2021) due to capital expenditure soaring 60% to RUB20bn. This pushed the company’s net debt soaring four-fold y/y to RUB85bn as of the end of 2022, or 4.2x debt/EBITDA, with a net cash position of RUB49bn.

VK previosuly posted 4Q22 revenue growth of 19.5% year on year to RUB32bn ($0.4bn), but saw EBITDA decline by 30% to RUB4.8bn, making a 15% margin.