Russian e-Commerce Giant Ulmart Heading Toward IPO

Russia’s answer to Amazon, Ulmart, has confirmed that it plans to IPO in the next year.   Russia’s leading e-commerce company confirmed early today (January 21)  that it will go public in  a yet-to-be-determined Western stock exchange and that it is considering using the IPO to bring in $1 billion or more in exchange for 25 percent of the firm, according to reports in VentureBeat.

IPO Advisers will likely be appointed in the next few months.

In March of last year, Ulmart initially announced that it planned to go public in 2015 based on a $3 billion valuation. That was before Russia and the Ukraine began their stand-off and the international community’s general outlook on Russia shifted dramatically and negatively. In light of the unfavorable global conditions, the e-commerce company put its plans on hold.

In the meantime, Ulmart outperformed average market growth last year with its sales revenues reaching $1.3 billion in 2014, a 50 percent increase from 2013.

Overall, one year from the company’s first noises about an IPO, Ulmart has strengthened its position in the still expanding e-commerce market in Russia and is now able to make a rather compelling case for potential investors.  That compelling case could lead to a $5 billion or $6 billion valuation for the firm, according to early estimates by JPMorgan and Morgan Stanley.

Ulmart’s unique contribution to the e-commerce world are the “cybermarkets” that make up 30 percent of the company’s sales.  A cybermarket is a physical location where customers can buy products on computers with screens that display an almost unlimited virtual storage area. The company operates 27 cybermarkets with more fast-tracked for expansion throughout Russia’s regions.

“Since the main part of our flat costs will remain unchanged, our EBITDA could reach 6 percent (6 billion rubles) and our profit 2 percent (2 billion rubles),” says Kostygin. At current exchange rates, these figures would correspond to more than $90 million and $30 million, respectively.

The Russian digital commerce market increased by 27 percent in rubles (to 660 billion) but only by 5 percent in US dollars (to $17 billion).