MegaFon set to buy $14 mln stake in Citymobil, Mail.Ru $12 mln

MegaFon Logo

Russian mobile operator MegaFon and Internet giant Mail.Ru Group will get minority stakes in taxi aggregator Citymobil by participating in its latest funding round with investments up to U.S. $14 million and $12 million respectively.

MegaFon will enter Citymobil’s capital through its wholly owned subsidiary MegaLabs, which can receive a 31% stake in Citymobil. MegaFon will not consolidate the acquisition into its results.

“We believe that this investment is a promising opportunity both financially and strategically. The ride-hailing market is developing very rapidly, and is ripe for a new wave of disruption by fast moving players with interesting ideas in technology and marketing. As a further step in the implementation of the company’s digital strategy, we aim to expand the ecosystem of our digital services and products, and to create opportunities for our subscribers to explore new customer experiences,” MegaFon’s Executive Director Gevork Vermishyan said.

Mail.Ru Group will get up to a 26% stake in the Moscow-based ride-hailing startup and will not consolidate Citymobil in its financial results.

The Internet company’s CEO Boris Dobrodeyev said: “Mail.Ru Group is expanding its presence in online-to-offline (O2O) services and taxi will become part of our ecosystem. We believe in significant potential of taxi integration with our social platforms and in cooperation with Delivery Club”.

Aram Arakelyan, founder and CEO of Citymobil: “We are excited with the entry of such investors and very motivated by this trust. Vast expertise in online marketing, client service, operations and many other areas that our new investors may bring will give us a lot of support in our quest for building a new big national player”.

Citymobil started as an off-line Moscow taxi operator. Recently the company re-shaped its business model and moved on-line with over 65% of rides now being booked through the application.