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Prosus to write off $700 million stake in Russia's VK Group

Dutch investor Prosus to write off $700 million stake in VK Group
Dutch investor Prosus to write off $700 million stake in VK Group   -   Copyright  Thomson Reuters 2022
By Reuters

By Toby Sterling and Promit Mukherjee

AMSTERDAM – Dutch technology investor Prosus will write off its entire 25.9% stake in Moscow-headquartered online platform VK Group, which it says was valued on its books at $700 million.

VK Group Ltd, known until October as Mail.Ru, is one of Russia’s largest internet companies, known for the VKontakte social network, Russia’s answer to Facebook.

The company has a depository receipt listing on the London Stock Exchange and is registered in Cyprus, with headquarters in Moscow.

The writedown announced on Monday comes after the VK Group’s CEO Vladimir Kirienko was added to a U.S. sanctions list after Russia’s invasion of Ukraine. Trading in the company’s London shares were suspended on March 3 after tumbling 92% this year.

“As a consequence of these sanctions, Prosus asked its directors on the VK board to resign their positions,” the Dutch company said in a statement.

Prosus is part of a cross-holding entity with Naspers of South Africa, with the two companies sharing a single board.

On a call with investors after the writedown decision was made public, the company’s executives said it was not yet clear how the conflict in Ukraine will affect its Russian classified business Avito, Russia’s largest online marketplace.

Prosus CEO Bob Van Dijk said analysts had valued Avito at $6 billion before the conflict in Ukraine.

“Obviously there will be an impact on the business, I think it is too early to say exactly what it will be,” he said.

CFO Basil Sgourdos said that while VK Group’s stock market value is clear there are too many uncertainties around Avito to value the business, especially given the falling value of the Russian rouble.

Avito’s costs and operations are in Russia, where it employs 4,000 people.

Prosus shares, which are down 33% this year, were up 3.9% at 49.27 euros in Amsterdam. Naspers shares, down 34% in the year to date, closed little changed at 1,634 rand in Johannesburg.