Mail.ru: The Secret King of Silicon Valley Stock

When Russian investor Yuri Milner burst onto the Silicon Valley scene with heavy investments in Facebook and Zynga, most of his rivals and most of his portfolio companies didnt know much about where hed come from. His fortune was substantial, raised largely through founding Russias biggest website, Mail.ru, but the wealth he brought with him was still something of an unknown quantity.

Now, six months after the company that generated his fortune launched on the London Stock Exchange, some of the financial details have become a little clearer.

In its first annual results since going public, Mail.ru announced that in its last full year, revenue across the group was $324.7 million, which represented a 64 percent increase on the previous year. Profit, meanwhile, was $77.3 million up 66 percent on 2009. On top of this, there were a few exceptional items to take into account such as the $187.5 million purchase of stalwart messaging service ICQ and the stock market flotation that raised in excess of $1 billion.

To put that in perspective, that makes it around the one-twentieth the size of Yahoo in terms of revenue.

Beyond the headline numbers, the news also helped break down details on some of the investments that the Russian company holds in America. Much of Milners Silicon Valley portfolio is through the decidedly un-public DST Global the affiliated business that does most of his investing. But the wider company thats hes chairman of still owns part of those deal! s, and < em>those are specified in Mail.rus annual report: specifically, the statement that Mail.ru holds a 2.33 percent stake in Facebook, a 1.41 percent stake in Zynga and has 4.63 percent of Groupon equity.

Now, heres the astonishing thing. Ive just done a back of the envelope calculation to work out what that means. At the conservative end of current valuations (which put Facebook at $50 billion, Groupon at $15 billion and Zynga at $10 billion) that would suggest that Mail.ru a company that made $77 million in profit last year has minority investments in Silicon Valley worth about $2 billion. Sounds incredible, really.

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