Netflix’s Russian Rival Hires Goldman to Study Possible Deals

(Bloomberg) -- Ivi.ru, Russia’s largest streaming platform, hired Goldman Sachs Group Inc. to study options to fund the firm’s growth, according to the firm’s chief executive officer.

“These could be private placement, strategic alliances or an IPO,” Oleg Tumanov, Ivi’s founder and CEO, said in an interview in Moscow. “We need funding to produce our own content and keep growing faster than the market.” He declined to elaborate on the amount the service is seeking to raise as no decisions have been taken.

Founded in 2010, when most Russians downloaded movies for free on pirate websites, Ivi originally used a combination of advertising and a Netflix-like subscription fee. Now, three quarters of the streaming service’s revenue comes from paying users, Tumanov said, as the market matures following the introduction of measures by the government to fight online piracy. Sales rose 55% last year to almost $100 million.

Streaming services ranging from Netflix Inc. to Walt Disney Co. are battling to grow their user numbers globally as customers switch away from traditional television services in favor of watching content on mobile phones and tablets. Ivi is Russia’s largest streaming service with a market share of about 35%, according to researcher TMT Consulting.

Its competitors include Okko, co-owned by Russia’s largest lender Sberbank PJSC, billionaire Len Blavatnik-backed Amediateka, local technology giant Yandex NV’s Kinopoisk, Gazprom PJSC-linked Premier, and other services. Netflix, which doesn’t have a local-language service and translates only selected titles, isn’t a dominant player in the country.

Goldman Sachs has been successful in doing deals in Russia even amid economic and geopolitical hurdles. Last year, it helped the country’s largest online-recruitment firm HeadHunter Group Plc to sell shares in the U.S. and sold a stake in retailer Familia to TJX Companies Inc. in a private deal. Goldman held shares in both companies. The bank’s spokesperson declined to comment on Ivi.

Tumanov denied an earlier Kommersant report that Ivi hired JPMorgan Chase & Co. to manage an IPO in the U.S. He said JPMorgan is not involved, and an IPO isn’t the only option being considered. Tiger Global Management, Baring Vostok and Leonid Boguslavsky’s RTP Global are among the investors in the streaming service.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editors responsible for this story: Neil Callanan at ncallanan@bloomberg.net, Amy Thomson

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