It seems that we are witnessing a virtual land grab of epic proportions, as the battle for control of global social media intensifies. The latest Billionaire to make his move is Alisher Usmanov, who has used his internet holding Company Mail.ru to buy a 12% stake in Russia’s largest social networking site, VKontakte, which gives him a controlling 52% share of the Company.
The shares were purchased from Usmanov-owned Megafon CEO Ivan Tavrin, and strengthens an impressive stable of tech holdings, which already includes Russia’s second and third most popular networking sites, Odnoklassniki (OK), and Moi Mir (My World), plus a holding in AliBaba, the Chinese online marketplace, which is set to launch a $15bn IPO in New York.
Usmanov, whose personal wealth is estimated to be just over $18 billion USD, acted decisively, as a dispute with United Capital Partners, who hold the remaining 48% of VKontakte stock, over the future of co-founder Pavel Durov, threatened to de-stabilise the Company.
UCP called for Durov to resign, accusing him of a dereliction of duty as he pursued other projects, including his own start-up, The Telegram messenger service, however Durov retains Usmanov’s support, who sees him as the key to VKontakte’s ongoing success.
Seats on the VKontakte board are split 50-50 between between Mail.Ru and UCP, however it is highly likely that UCP will be prepared to sell at the right price, as they are becoming increasingly disillusioned with the direction the Company is taking.
Russia has the largest number of internet users in Europe, and Usmanov’s close friend, President Putin, will no doubt be delighted to see control fall into the hands of an ally. Putin is determined to ramp up monitoring of web activity, after activists used social media to disrupt his United Russia party’s 2011 parliamentary campaign.
Mail.Ru is listed in London on the LSE, where Usmanov also owns a substantial stake in Arsenal FC and Megafon, the original owner of the stake he has purchased. Ivan Tavrin purchased the stock on behalf of Megafon from the secretive Durov, for approximately $250 million.
It has been a bumper 18 months for Usmanov; he netted around $250 million USD after Megafon paid a dividend in May last year, and sold a 7.4% stake in Mail.ru back in February which earned him another $530 million. Next, $525 million was raised after Mail.Ru sold its 0.6% stake in Facebook, reaping the benefits of holding onto the stock after a lock-in period expired, as the stock price recovered to pre IPO levels.
The recent slump in the value of Russia’s companies in the wake of the crisis in Ukraine has also played into Usmanov’s hands, as he recently announced plans to buy back up to $45 million USD of Mail.ru stock.
Mail.ru, which describes itself as a “communitainment” Company, also owns Israeli instant messaging service ICQ, plus numerous online casinos and general entertainment websites. Last year the Company launched My.com, its US focused subsidiary, which specialises in free-to-play mobile games, and is expanding into games publishing.
As well as being Russia’s richest man, Usmanov was also named Britain’s richest man by the Sunday Times Rich List last year, qualifying for the accolade as he resides in the UK. Originally from Uzbekistan, his career took off at Gazprom, and he has served as a special advisor to Dmitry Medvedev, Russia’s PM. He is the owner of respected Russian business daily Kommersant, and his wife, Irina, coaches the Russian gymnastic team.