Russian Social Network VKontakte Says ‘Nyet’ To IPO, For Now, Following Facebook’s Struggles

By David Cohen 

Russian Facebook clone VKontakte is reportedly saying “nyet” to an initial public offering for now, scared off by the issues Facebook encountered with its IPO earlier this month.

Reuters reported that VKontakte Chief Executive Officer Pavel Durov announced Tuesday that his company’s planned IPO was postponed indefinitely, tweeting:

The IPO of FB destroyed the faith of many private investors in social networks.

According to Reuters, Mail.Ru Group, which holds a 39.9 percent stake in VKontakte, had backed Durov’s plan to proceed with the IPO and agreed to give him control over its voting rights.

Renaissance Capital Media and Information Technology Analyst David Ferguson told Reuters Mail.Ru Group and Durov own 52 percent of VKontakte combined, adding:

Mail.Ru has made no secret historically that it would like to take control of VKontakte. This has not happened, as the price expectations are a million miles apart. Now it has effectively decided to align its interest with one other shareholder.

Mail.Ru has a lot of cash — or it will when it completes the sale of its international businesses — and if it does not buy VKontakte, it could pay dividends.

Readers: Do you think the issues with Facebook’s IPO will affect other social media companies that are exploring going public?