You're reading: Horizon’s stake in Rozetka could be Ukraine’s biggest e-commerce deal

Ukraine-based private equity fund manager Horizon Capital has announced it made an investment in Ukraine's biggest online retailer Rozetka, although neither side has yet revealed the details of the deal.

Still, investment experts and other players in Ukraine’s e-commerce industry agree – the news is a signal that Ukraine remains attractive to big investors, despite Russia’s war in eastern Ukraine.

R0zetka, “led by visionary entrepreneurs, Vladyslav and Iryna Chechotkin, is the undisputed market leader in the fast-growing Ukrainian e-commerce segment. (The company) has superior brand recognition, top quality service and high customer satisfaction levels,” Horizon Capital’s press service said in a statement published on July 15.

Rozetka has nearly 40 percent of online home applicances and electronics market, according to Ukrainian Association of Direct Marketing. The value of the deal between Horizon Capital and Rozetka has not been disclosed, but experts agreed it was big for Ukraine.

According to Denis Dovgopoliy, managing partner of the business accelerator GrowthUP, various investors he has talked to in last three years have evaluated the net worth of Rozetka at between $200 million and $700 million. Dovgopoliy himself reckons the company is worth between $200 million and $400 million.

He said funds like Horizon Capital would try to get a 5-20 percent share in a company, for $10-100 million.

“I think the value of the deal lies between $30 million and $50 million,” Dovgopoliy told the Kyiv Post.

Mykola Palienko, CEO of another big Ukrainian retailer Prom.ua, told the Kyiv Post that the investment in Rozetka could be from $50 million up to $200 million.

“It could be one of the biggest deals in Ukrainian e-commerce ever,” Palienko said. He said this was good news not only for Rozetka, but also for the whole e-commerce industry, since it could encourage other investment funds to eye Ukraine.

Horizon Capital CEO Lenna Koszarny said in a statement that the investment was very important for the equity fund, and that it “clearly demonstrates our commitment to, and belief in, the strong upside potential of Ukraine.”

Dimitri Lisitski, the CEO of online marketplace All.biz in Ukraine, said the deal would add value across the entire Ukrainian e-commerce industry. “All Ukrainian e-commerce projects have gotten more expensive today [July 13, the day the deal was announced],” he said.

“This is important, [because] Horizon is a big investor – it’s been on Ukrainian market for many years and it understands what’s going on here,” Lisitski told the Kyiv Post. “Apparently, it has high expectations about the macroeconomic indicators of the country – Rozetka can’t be successful if the entire country is in crisis.”

Horizon Capital manages three funds with total capital of more than $600 million. The funding for the Rozetka deal is to come from Horizon Capital’s Emerging Europe Growth Fund II (EEGF II).

Kyiv Post stuff writer Alyona Zhuk can be reached at [email protected].