Russia’s state-owned Rosselkhozbank agricultural bank has acquired a 50% stake in Avito, the country’s largest classifieds platform, as part of a broader trend of strategic e-commerce acquisitions that is putting the control of the internet into state’s hands.

The stake was purchased from Kismet Capital Group, the investment firm controlled by businessman Ivan Tavrin, RBC reported on April 23, who acquired Avito in 2022 from South Africa's Naspers.

The sale was confirmed by Tavrin during a meeting with Avito employees, although the financial terms were not disclosed, The Bell reports. A source close to the transaction told RBC that the deal is “commercial” and incorporates elements of credit provided by Rosselkhozbank during Tavrin’s initial purchase of the company.

While Rosselkhozbank will now act as a co-owner, it does not intend to interfere in Avito’s management or alter its board of directors, RBC reports. The transaction is also seen as a step toward allowing the company to eventually pursue an initial public offering, possibly in a jurisdiction less impacted by international sanctions.

Kremlin takeovers

The deal is part of a general take-over of online assets by the Kremlin or businessmen close to the administration. The main vehicle in this drive has been VK, Russia’s answer to Facebook, that has been on a shopping spree for assets since the 2022 sanctions upturned Russia’s economy and started a tsunami of M&A deals. However, the company has gone too far, too fast and is running into financial problems and may need a bailout, bne IntelliNews reported.

Yandex, Russia’s answer to Google, has also been taken over by a consortium of oligarchs, after its founder Arkady Volozh openly criticised the barbaric war in Russia – one of only two top Russian businessmen to do so – and was forced to sell his stake in the Russian part of the business.

Wildberries, Russia’s leading e-commerce platform that belongs to Russia’s richest women Tatiana Kim (nee Bakalchu) also changed ownership last year in a bizarre handover that included a shootout outside of the offices of a downtown Moscow office complex and a divorce of wife/husband partnership. And in a very confusing move the husband turned to authoritarian Chechen President Ramzan Kadyrov for help, who said he would “fix it”. The deal also involved billionaire and Duma deputy Suleiman Kerimov of Polyus Gold and veteran technocrat Igor Shuvalov, who is one of Putin’s right-hand men and now runs the quasi-state-owned-development bank VEB.

And more recently it has just emerged a 27.7% stake in Russian second-largest e-commerce operator Ozon Holdings was sold in 2024 for RUB38.2bn ($437mn), a significant discount to its market value, according to RBC after the company recently disclosed its financial results for last year.

The Bell and unnamed sources cited by RBC claim that the buyer, a previously unknown entity named O23, is linked to Yuri Kovalchuk's Vostok Investments and the transaction was overseen by First Deputy Chief of Staff and former Prime Minister Sergei Kiriyenko.

bne IntelliNews already reported back in April 2024 that Kovalchuk's Vostok bought a 28% stake in Ozon from Baring Vostok Capital Partners, founded by Russia’s most famous fund manager Michael Calvey and is part of a clean up operation to push foreign investors out of strategic Russian sectors like e-commerce. The sale of Ozon's stake was reportedly a condition set by the authorities on Baring Vostok for its final exit deal involving 12 other major assets.

Russian President Vladimir Putin has long wanted a tighter grip on the internet after ignoring it for almost two decades. While the state fully controls Russia’s main TV broadcasters, unlike China, the Kremlin has long ignored the internet where interested Russians can find any number of opposition publications and unfiltered news. That changed after Putin launched a repressive crackdown on all media and opposition NGOs in 2021, following the arrest of late opposition leader Alexei Navalny, who died in prison on February 16 last year.

Sanctions

Kismet and Tavrin are currently subject to US sanctions, which restrict entities with more than a 50% share held by sanctioned individuals from accessing American financial systems, The Bell reports. Rosselkhozbank, in contrast, remains one of the few major Russian banks not under full US or EU blocking sanctions, owing largely to its role in supporting agricultural exports and Putin demanded what sanctions remain on the bank be lifted as part of the recent new Black Sea grain deal on March 25 as part of the on-going Ukraine conflict ceasefire talks.

Tavrin initially acquired Avito for RUB151bn ($2.4bn), a valuation representing more than half the company’s estimated pre-war worth. His bid won out over expected contenders including the VK Group and billionaire Vladimir Potanin, who is reportedly part of the consortium that has taken over Yandex’s Russian assets. At the time, Tavrin had not been sanctioned and agreed not to resell the asset for at least two years.

Although Tavrin said in 2022 he had no intention of reselling Avito, he told employees this week that he “feels fully responsible for ensuring that the spirit and culture of the company do not change with the arrival of the second shareholder and intends to be with Avito all his life.” He also confirmed that the shareholders are “interested in creating long-term shareholder value” and considering entry into public capital markets.

Avito reported revenue of RUB101bn ($1.6bn) and net profit of RUB39bn ($620mn) in 2023, according to RBC, placing it among the most profitable tech companies in Russia. In Forbes Russia’s 2024 ranking of the most valuable RuNet firms, Avito held fourth place with a valuation of $4.6bn.

The top three companies in the Forbes ranking—Yandex, Ozon, and Wildberries—have all seen ownership shift to state-aligned investors or individuals with Kremlin ties. The trend has sparked concerns over increased state influence across Russia’s digital economy.