Warburg Pincus, the global private equity investor, has taken a controlling interest in Radio 7, Kanal Melodia and Eldoradio, a group of three Russian radio stations with dominant positions in the Moscow and St Petersburg markets.
The businesses have been acquired from US firm Adamant Advisory Services via a new company set up by Warburg Pincus, RBMH Broadcast Media Holdings. The financial terms of the transaction have not been disclosed.
Funding for the transaction has come from two funds, Warburg Pincus International Partners, a $2.5bn fund, and Warburg Pincus Private Equity VIII, a $5.3bn fund.
“These stations hold established positions in the two largest radio markets in the country, enjoy a loyal base of listeners and advertisers, and possess capable and experienced management teams,” said Joseph Schull, a Warburg Pincus managing director based in London. “The Russian radio advertising market has grown strongly in recent years and we look for continued healthy growth in the coming years.”
Warburg Pincus confirmed earlier this month that it was planning to move into the Russian market. Schull said the firm would look to invest in businesses in sectors ranging from retail to financial services, investing between $20m and $50m per company.
The Russian government is predicting that the economy will grow by 5.2 per cent this year, considerably higher than the average growth expected in Western countries. Data published by Bloomberg indicates that $19.2bn of M&A activity has been completed in Russia this year, four times the total reported in 2002.
“The profits generated through Russia's natural resources are starting to be reinvested in the economy,” Schull told Bloomberg recently. “We feel comfortable with our ability to understand and deal with emerging markets risk in a way that many are not.”