bne IntelliNews – Sistema acquires a 47.7% stake in Melon Fashion Group

Russian investment conglomerate AFK System agreed to acquire a 47.7% interest in Melon Fashion Group JSC for 15.8 billion rubles, according to a Press release on the Sistema website. The stake will be purchased from Swedish Eastnine and East Capital Holding AB, as well as a group of individual investors.

Sistema says it will finance the transaction, which is expected to be completed by the end of 2022, using a combination of its own funds and borrowed funds.

Melon Fashion Group (MFG) owns a portfolio of Russian clothing brands, including Zarina, befree, Love Republic and Sela. The company, founded in 2005, now operates in 181 cities in Russia and the CIS, with more than 845 stores.

“Melon Fashion Group is growing rapidly and demonstrating operational excellence. The transaction is fully in line with our investment strategy, which is focused on consolidating high-quality assets as well as exploiting opportunities arising from the ongoing transformation of the market,” said Sistema Chairman Tagir. Sitdekov.

In 2021, MFG reported that revenue rose 49% year-on-year to 37.5 billion rubles as online sales increased. A relatively fragmented Russian clothing market has given managers extra room for growth, and the group was would have considering an IPO last year.

“Given the possible interest of other shareholders in selling their shares, we are ready to consider the possibility of further buybacks,” Sistema’s press office said. bne IntelliNews.

“We greatly appreciate the company’s development strategy and have tremendous respect for the management of MFG. MFG has one of the most professional teams in the retail market, under whose leadership the business has demonstrated impressive momentum in operational and financial performance over the years,” the news service added.

The agreement makes Sistema MFG the main shareholder. Other major shareholders are founder David Kellermann (40%) and CEO Mikhail Urzhumtsev (6%). The remaining stake is held by a group of private minority investors.

AFK Sistema is a holding company with interests in sectors such as telecommunications, agriculture, financial services and e-commerce. The total assets were valued to 1.8 trillion rubles in 2021.

Sistema also has extensive retail experience, having bought children’s retailer Detsky Mir when there was only one outlet. Detsky Mir went public in 2017, bringing Sistema more than 60 billion rubles to date in equity investments and dividends.

Sistema’s portfolio also includes the Russian e-commerce leader Ozonewhose IPO took place in 2020, and the private medical company Medsi, which includes 120 clinics located in Moscow and other regions of Russia.

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