Czech financial services firm PPF Group NV has inked a deal that will give it majority control of Russian electrical retailer Eldorado. The troubled retailer which ran afoul of the Russian Tax Service had previously declared bankruptcy.
The deal is packaged as a USD 500 million loan which when converted, gives PPF a 50% stake plus one share, making it the majority shareholder. Other committed investors have agreed to corporate governance of their new joint business.
One of PPF’s primary goals is to double the number of Eldorado retail outlets and make its consumer financial services readily available in these outlets.
Eldorado was established in 1994 as a retailer of household appliances and consumer electronics. It is now the largest such retailer in Russian with 1100 stores and 460 mobile shops operating under the Eldorado and ETO brands.
It currently boasts of controlling 28% of the consumer electronics market for all of Russia and Ukraine, and even claims an 80% market share in some cities. In addition to smaller outlets, Eldorado does have some hypermarkets carrying major appliances such as refrigerators, washing machines, etc.
In addition, Eldorado’s web portal was ranked the number one online home electronics and appliance retailer for the first two months of 2009. The site has seen an increase in traffic of about 60% compared to the same period last year.
PPF Group (www.ppf.cz)
PPF Investments is an independent, international private equity group with a specific focus on transitional economies, such as those found in Central and Eastern Europe and Asia. Currently, PPF Investments is assessing investment opportunities in Russia, Ukraine, China, and Central and Eastern Europe. PPF Investments has offices in London, Prague, Kiev, Moscow, and Beijing.