Mail.ru Group, DST Earn Huge Profit from Facebook IPO

Mail.ru Group and the Digital Sky Technologies (DST) companies earned a tidy sum from the 18 May Facebook IPO. Their original investments between 2009 and 2011 totaled $900 million. During the IPO they earned $2.5 billion and still hold over 5% of Facebook.

Mail.ru Goup, which was created by Yuriy Milner and is now controlled by oligarch Alisher Usmanov, earned $740 million from the sale of part its Facebook shares and maintains 1.7% of the shares in the company and 2.4% of the voting shares.

The DST investment funds, which Yuriy Milner manages, were the second largest sellers of shares during the IPO, which earned them a total of $1.73 billion. They still hold 4% of the shares and 5.2% of the voting shares. Of the DST funds, DST USA II sold the greatest amount of Facebook stock, earning it $1.026 billion and DST USA earned $340 million.  DST Global, which invests Usmanov’s money, earned $230 million. DST Global II and DST Global III, which invest money from other investors including Milner and Usmanov, earned $76 million and $22 million from the sale of their Facebook stocks respectively.

In an interview for the New York Times before the Facebook IPO, Usmanov said he planned to use the proceeds from the IPO to invest and pay down debt at his other Russian businesses.

Yuriy Milner Leaves Mail.ru Group Board

Yuriy Milner, one of the founders of Mail.ru Group (the biggest Internet company in Russia and the fifth largest in the world in page views), announced on 14 March that he is stepping down as chairman of the board of the holding company.

Although neither Milner nor Mail.ru Group commented on the reasons for the move, the decision appears to have been agreeable for both sides.  Several sources have speculated that Milner left so that he could concentrate on his international investment fund DST Global, where he has been spending the majority of his time lately. For its part, Mail.ru Group is moving away from investment in other Internet companies, which was Milner’s area of expertise, to concentrate on operations and producing new products on its own.

Analysts appear to believe that Milner’s departure will not have a negative impact on Mail.ru Group. Dmitriy Grishin, Milner’s business partner of 10 years and the general director of Mail.ru Group, will replace him as chairman of the board and will also retain his position as general director. Grishin has been managing all day-to-day activity since 2003, working very closely with Milner.