Datagroup sells 25% stake for USD40m, aims to raise USD100m more

11 Aug 2010

Ukrainian corporate-focused telco Datagroup has agreed to sell 25% of its equity to eastern European fund manager Horizon Capital, in a deal which is due to close this week, according to local daily newspaper Delo. Datagroup’s founder, Alexander Kardakov, who prior to the transaction controlled around 84% of company shares, was quoted as saying that the entire investment will go into the development of the telco’s operations, in particular continuing a strategy of widening its scope beyond the corporate user segment to increase market share in the retail consumer/SME telecoms sector. Datagroup’s press service added that the firm planned to work in partnership with Horizon to attract additional investment of up to USD100 million over the next two years. The newspaper quoted a source linked with the investor as saying that the funds would be used by Datagroup to resume its previous strategy of buying up smaller regional Ukrainian fixed network operators – a campaign that it pursued aggressively before its ambitions were curtailed by the onset of a severe economic downturn in the country.

According to TeleGeography’s GlobalComms Database, Datagroup is Ukraine’s fourth largest fixed line service provider by revenue, with a network linking more than 50 cities; in addition to business data/voice transmission services, it offers PSTN voice telephony, VoIP, internet access and digital TV. The full range of its communications services were available in 20 cities as of June 2010. Datagroup claims to be Ukraine’s corporate data services market leader, although it admits its share is slipping, prompting it to step up attempts to expand its consumer broadband services. Horizon Capital, founded in 2006, manages private equity funds and invests in mid-size companies in Ukraine, Belarus and Moldova. It currently manages three funds: Western NIS Enterprise Fund, Emerging Europe Growth Fund and Emerging Europe Growth Fund II, with total capital of more than USD600 million.

Ukraine, Datagroup