The sharp fall in the Ruble exchange rate at the end of 2014 led to the fact that China’s bike supplies that were spiked significantly at that time, were sharply reduced. As a consequence of the absolute uncertainty regarding the Ruble exchange rate in the future and the demand for sporting goods in the summer, there was a sharp decline in the number of bikes that were available for purchase in the summer of 2015.
This opportunity became clear in the spring of 2015, after the situation stabilized. In order to benefit from this situation, it was necessary to quickly obtain financing for the purchase of bicycle parts for subsequent assembly at Russian plants. Taking into account the widespread deterioration in financial results at the end of 2014 till the beginning of 2015, lending was unavailable. Therefore, mezzanine financing was used, where the shareholders of the bank received a minority share in the company in exchange of a low interest rate on the loan.
Business: $30M revenue per year, Ebitda $4M per year.
Deal: $20M cash-in for expanding assortment.
Deal Industry: Internet, Retail
Deal Type: Private Equity