Who really owns the Magnit network - Metals and their processing

History of the Pyaterochka company: who is the owner of Pyaterochka in Russia

History of the Pyaterochka company, who is the founder, who currently owns it? What is the history of development and success, are there any interesting facts from the “life” of the organization? This will be discussed in this article.

We remind you that Pyaterochka is the largest chain of stores where you can purchase, in addition to food, essential goods. A fairly extensive organization with distribution in most cities of the Russian Federation. For some time now, the company has been actively promoting delivery services through partner courier services.

But for now such services are available only in the Moscow region. But according to the owners, similar services may soon appear in other large settlements, in particular, St. Petersburg, Kazan and others.

A wide range of promotions and offers that allow you to actively develop and be popular among customers.

The history of the creation of the Pyaterochka retail chain

The future chain of Pyaterochka stores appeared in 1998, its founders and owners are Andrei Rogachev and Alexander Girda. If the trademark was first registered back in 1998, the first store was opened only a year later, in 1999. It is located at 30 Slavy Avenue, St. Petersburg. After some time, retail outlets begin to appear in other localities of the Russian Federation, in particular, Moscow and Kazan.

Andrey Rogachev

To everyone’s surprise, the decision to develop was made immediately; the owners did not intend to stop at several “points”, which means that already at the end of January 2000 there were more than 15 establishments in St. Petersburg.

In the same year, the company was awarded first place in the “Best Retail Network” rating. Since that time, its own personnel training center has been opened, which is still in operation today.

The center allows not only to select qualified personnel, but to conduct training and organize training courses for employees.

Alexander Girda

In 2002, the owners made a serious decision to start selling the franchise, which ultimately played a positive role. Two years later, the brand leaves the all-Russian market for the foreign segment; the first “points” are opened in Ukraine and Kazakhstan.

In 2009, it was awarded the title “Best Trademark” and was declared company number 1.
Who currently owns the network, who is the owner? We'll talk about this further.

Who owns the Pyaterochka retail chain?

Who owns the chain of stores? Who is the owner of Pyaterochka?

It is immediately worth noting that a legal entity is owned by several people and companies.

The owners with a total stake of 21.2% are Alexander Girda and Andrey Rogachev (they are also the founders). Another 21.9% is owned by businessman Mikhail Fridman. More than 47% is owned by CTF Holdings SA, part of the large consortium Alfa Group, the remaining 12% is owned by Intertrust Trustees Ltd and the board of directors of Pyaterochka.

History of success

The development of the Pyaterochka network in Russia is of stable importance, in contrast to other countries such as Ukraine and Kazakhstan. In Kazakhstan, for example, the company was renamed “7ya”; in fact, it is a different store. In Ukraine, the company cannot please us with its development successes. Unlike these countries, in the Russian Federation “5” has found its niche and is remembered by most customers as a convenient store near their home.

Today in Russia there are already more than 13,000 establishments, open both as franchises and directly.
Due to stable and systematic adherence to its main principle - “a store within walking distance”, in just 20 years the chain managed to grow into the most famous retail store. To date, net revenue for owners is more than 1,000,800 million rubles.

Interesting Facts

Pyaterochka and Perekrestok, Karusel are part of the retail group owned by X5 Retail Group.
CEO since May 2018, former owner of Magnit Cosmetics.
Pyaterochka brings enormous profits to its owners, more than one billion a year.
Repeatedly occupied leading positions in all-Russian ratings.
One of the widest and most diversified areas of presence in almost all regions of the country.
More than 13,000 establishments at the end of 2018.

Source: https://DostavkaServis.ru/istoriya-kompanii-pyaterochka

Network owner

There are not many oligarchs in our country who have created a business from scratch, without participating in the sale of any raw materials. One of these is Sergei Galitsky (“Magnit”).

The biography of a businessman is a unique story about how a man made himself, without participating in the privatization of factories or selling resources abroad. His personal story is an example of determination and hard work.

Let's talk about how the owner of the Magnit chain, Sergei Galitsky, was formed and grew. The biography of an entrepreneur will be of interest to those who dream of their own business and are looking for their path in life.

Childhood

Harutyunyan (Galitsky) Sergei Nikolaevich, whose biography is the subject of our article, was born on August 14, 1967 in the village of Lazarevskoye, near Sochi. Despite his surname, the boy grew up in an absolutely Russian environment. According to him, he has only 25% Armenian blood, and Sergei doesn’t even know the language of this nation, but today he is proud of his origin.

Since childhood, the boy had a great passion for football, he studied in the section, played with friends in the yard. But he realized in time that he had no future in this sport. Another childhood hobby of his is chess. But even here, with all his prudence, he realized that he would not become a world champion. And the desire to be first was inherent in him since childhood. Therefore, Sergei decided to succeed in his studies. Although he did not become an excellent student, he was very successful in the exact sciences.

Sergei studied well at school and was an active participant in public life.

Entering adulthood

In Soviet times, serving in the army was a mandatory step in life for many young men, and Sergei Galitsky was one of these young people. Biography, the guy’s parents were quite typical for that time.

The origin and beginning of Sergei’s life did not foreshadow any great achievements. All he had was himself, his sanity and hard work. Therefore, he decided to start his adult life by serving in the armed forces.

Two years in the army helped him clearly define his priorities and life goals.

Education

After demobilization, Sergei Galitsky, whose biography developed according to a scenario quite typical for that time, entered Kuban University, the Faculty of Economics. Military service gave him certain benefits, and Sergei easily entered a prestigious university. He studied well and even wrote an article on financial liquidity in his second year for the famous professional magazine “Finance and Credit.”

The editors recognized Sergei's article as serious and published it. In the financial world of Krasnodar, this publication created a real sensation, and Galitsky was invited for an interview at one of the city’s banks. If before this Sergei had to work part-time as a loader, now he was offered to work as a deputy bank manager.

He successfully combined work with study and successfully received a diploma of higher education, which gave him opportunities for professional growth.

Failed banker

After graduating from university, Galitsky worked at the bank for another year, but the young specialist quickly began to realize that this institution was not at all what he would like to do in the future. Later in an interview, Sergei said that the bank was actually a “small money changer.” Therefore, a year after graduating from university, Galitsky decided to quit the bank. He said he left because he “didn’t want to attend his funeral.”

First entrepreneurial experience

At this time, a boom in private entrepreneurship was growing in the country, everyone around was starting different types of businesses, dreaming of getting rich. These sentiments also gripped Sergei.

After leaving the bank, he, together with several classmates, created the Transasia company, the initial capital was 30 thousand dollars, which Sergei took on credit thanks to his bank acquaintances. The company engaged in wholesale supplies of cosmetics and household chemicals.

At first, according to Galitsky, the company was balancing between a financial abyss and small profits. But soon the guys managed to become the only distributor in the Krasnodar region of the world's largest company Procter & Gambl. The company began to generate stable income and prospects. But soon Procter & Gambl demanded that a separate company work with it.

Therefore, the decision was made to divide Transasia. The cosmetics business went to Galitsky’s partners, and he got the Thunder company. For several years he searched for his niche in the market and calculated his options. His business sense and unique talent for making money helped him enter a new market.

"Magnet"

In 1998, Sergei Galitsky, whose biography from that moment on was long associated with food retail, opened his first grocery store in the Cash&Carry format. The outlet was profitable, but did not offer much prospects for development. And two years later, Galitsky decided to change the format. In 2000, the first Magnit store appeared in Krasnodar in the discounter format. Sergei immediately began positioning his outlets as a chain of grocery stores with low prices.

The format turned out to be in great demand, and Sergei began to actively develop the network. He rented small premises for stores, which he now positioned as “low-price convenience stores.” He began developing the network through quiet expansion into small towns. He tried not to compete with large grocery chain retailers. And the strategy turned out to be very successful. Five years later, the network’s turnover reached $1.6 billion.

Galitsky did not stop there and in 2006 brought the company to IPO and attracted investments worth $368 million. Sergei's share in the company was 58%, and his permanent partner Alexey Bogachev was 15%. The funds received were used to develop the network, and in 2007 it consisted of 1,900 stores throughout the country. “Magnit” is growing with new formats – hypermarkets, supermarkets, mini-stores.

In 2008, the network once again entered the stock exchange, and in 2010 the number of its outlets grew to 4 thousand. In 2011, there were already 5 thousand stores of various formats under the name “Magnit”. The company once again resorts to selling shares, which reduces Galitsky's share to 36%, but he still remains the main owner of the network. This is his principled position; Sergei believes that a business should have one owner.

In 2013, Magnit became the leader in terms of turnover and number of stores in the country, overtaking its eternal competitor, the Pyaterochka chain. In 2014, Galitsky reduced his stake, selling part of it in order to raise money to finance his other projects. By 2015, Magnit had grown to 120 thousand points of various formats.

State

As of 2016, the founder of Magnit, Sergei Galitsky, whose biography is strongly associated with grocery stores, is the largest shareholder of the chain, he owns 37% of the shares. In 2016, his fortune, according to Forbes magazine, amounted to $5,700 million, placing him 17th on the list of the richest entrepreneurs in Russia.

It should be noted that this is not the best indicator for Galitsky; in 2014 he was in 10th place with a fortune of $10,300 million. A businessman often says that he experiences two pleasures in life: when he earns money and when he spends it. In recent years, he has been spending a lot of money on various projects.

Sergei also said more than once that he intends to spend his entire fortune during his lifetime.

Galitsky – director

Large entrepreneurs always develop their own unique leadership style, and Sergei Galitsky is no exception. The biography of the businessman proves that he is an extraordinary person. And this is confirmed by the impressions of his partners and employees. Galitsky is a strategist, he always looks far ahead, and trusts tactics to managers.

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He knows how to hire high-quality employees and trusts them to solve problems of their level. Galitsky is a brave businessman, he loves risky, extraordinary solutions and is not afraid to implement them. At the same time, Sergei is a fairly tough leader, he is not ready to make concessions, and knows how to motivate employees to do good work.

Thus, the company’s top management owns 8% of Magnit’s shares, so it is interested in the stores’ profits.

Football

Billionaire Sergei Galitsky, whose biography developed like a fairy tale, did not forget about his childhood hobbies. In 2008, he bought a very mediocre football team, Krasnodar, and invested a lot of money in it. Today she belongs to the elite of Russian football.

Galitsky finances a school for aspiring Krasnodar football players and built an excellent stadium for his team’s training and games. He invests about $40 million a year in the team, but at the same time, according to him, this is not a business project, but a great pleasure for him.

Personal life

The owner of Magnit, Sergei Galitsky, whose biography is the subject of our consideration, is married. His wife was his former classmate Victoria. She was once an accountant, but has not worked for many years, doing the “hard work” of an oligarch’s wife. The couple has a daughter, Polina. She studies at the same university where her parents once studied. The girl is one of the ten richest Russian heiresses. But at the same time, all her friends note that Polina does not have stellar aspirations at all.

Source: https://FB.ru/article/286647/vladelets-seti-magnit-sergey-galitskiy-biografiya-i-foto

Football instead of trade: founder of the Magnit network Sergei Galitsky ceded control over the business to VTB

The founder of the Magnit retail chain, Sergei Galitsky, sold a 29.1% stake to VTB and left the company’s board of directors. The transaction price was 138 billion rubles. The top manager explained his decision by a difference in views on the future of the company with other shareholders.

The businessman announced this at the Russian Investment Forum. After leaving Magnit, Galitsky intends to concentrate on managing the Krasnodar football club, of which he is the owner. RT looked into the future prospects of the retail chain.

On February 16, the VTB financial group signed an agreement to acquire a 29.1% stake in Magnit from the founder of the retail chain, Sergei Galitsky. To complete the transaction, approval from the Federal Antimonopoly Service is required, but VTB head Andrei Kostin “does not see any problems with the approval.” The top manager announced this at the Russian Investment Forum in Sochi.

After the deal is closed, VTB will become the largest shareholder of Magnit, and Sergei Galitsky will retain a minority stake of 3%. The reduction of Galitsky’s share in the retailer became known at the end of January. Thus, the company’s press service reported that since January 29, the founder of the network owns 31.79% of the shares (instead of 34.26%). Currently, about 54% of Magnit shares are in free float.

According to the first deputy chairman of VTB, Yuri Solovyov, the issue of electing new management of the network will be decided on February 16. The company will also determine the date of the extraordinary meeting of shareholders.

It is already known that Magnit will be headed by its financial director Khachatur Pombukhchan. However, it is not yet known whether Galitsky will take part in the management of the company. The businessman himself said at a forum in Sochi that he was leaving retail to focus on football.

“I will stay at the Krasnodar football club. I will focus on the club and youth football. I’m unlikely to return to the executive committee of the Russian Football Union,” TASS quotes Galitsky.

In the 2014/15 season, Krasnodar won bronze medals in the national championship, and in 2013 they reached the final of the Russian Cup. The team also regularly plays in European competitions. The Bulls' maximum achievement is reaching the 1/8 finals of the Europa League in 2017. Galitsky himself was a member of the executive committee of the Russian Football Union (RFU) from April 2014 to March 2016, but was not included in its new composition.

«Care of the century"

The deal is also interesting because the US Treasury Department previously included Sergei Galitsky in the “Kremlin report.” However, according to the head of the Fanderi analytical center, Mikhail Belyaev, the situation is an ordinary redistribution of resources. According to the expert, the decision made will benefit both the network itself and its new owner. It is also unclear whether the founder of Magnit will remain on the VTB Supervisory Board, of which he has been a member since 2015.

“The deal will benefit both the network itself and its new owner. When VTB gains control of one of Russia's largest food chains, Magnit will have fewer opportunities to abuse its monopoly position. For this, Magnit has been repeatedly criticized by experts and the media. VTB, I believe, is acquiring the network, since in an integrated form it is easier to take steps in the field of introducing digital technologies in the trade sector,” Mikhail Belyaev explained to RT.

Galitsky’s exit from Magnit’s share capital did not come as a surprise to the market - the retail chain has been experiencing financial problems over the past two years.

At the end of 2016, net profit under IFRS fell for the first time in the company’s history (by 8% to 54.36 billion rubles).

Experts emphasize that Magnit’s main competitor, X5 Retail Group, which manages the Perekrestok and Pyaterochka chains, recorded the highest revenue growth in its history in 2016, by almost a third. This fact further undermined the company’s position in the market - at the beginning of this year, X5 Retail Group overtook Magnit in capitalization on both the London and Moscow stock exchanges.

According to Otkritie Broker analyst Timur Nigmatullin, this situation arose due to strategic miscalculations by Magnit’s top management.

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“In recent years, Magnit has been steadily slowing down its expansion. The company began updating its stores very late compared to its key competitor, X5 Retail Group, and as a result faced an outflow of traffic. “Magnit also practically did not focus on loyalty programs,” the analyst noted in a conversation with RT.

He added that in addition to the difficult economic situation, Magnit’s meager investment program, compared to its competitors, also played a role. The retailer chose to pay out a significant portion of its operating cash flow as dividends. In addition, a significant share of Magnit’s investment program was in non-core areas, such as food production.

Negative reaction

Against the backdrop of information about the sale of a blocking stake in the company by Sergei Galitsky, Magnit’s securities went down sharply. In the middle of the trading day on February 16, the value of Magnit's global depositary receipts (GDR) on the London Stock Exchange fell by more than 9%. On the Moscow Exchange, the cost of one share of the retailer was 4,558 thousand rubles (a drop of 6.04% since the opening of trading). This figure is the minimum over the past five years.

The company's securities have been showing negative dynamics since October 2017 - and the sharpest drop in 2018 occurred precisely after the announcement of a reduction in Galitsky's share in the business. As Timur Nigmatullin notes, Friday's drop occurs against the backdrop of short-term negativity - the low price of the transaction and the absence of an offer to minority shareholders (since a stake of less than 30% is being sold).

“Fundamentally, the company is very cheap, and in the coming quarters the positive effect of store renovations will be noticeable. If growth accelerates (the company has the resource for this in the form of low debt), Magnit’s market capitalization will begin to recover. Nevertheless, a bad attitude towards minority shareholders will have its negative impact, and the company is unlikely to trade significantly above the market,” Nigmatullin concluded.

VTB management is more optimistic, expecting an increase in the price of the network's securities. Andrey Kostin clarified that VTB expects to remain a shareholder of Magnit in the next two to three years, but does not guarantee its participation for a future of more than five years.

“We probably won’t remain in this asset forever, we will leave it someday,” RIA Novosti quotes Kostin.

In turn, the retail chain has already stated that the dividend policy will remain the same and indicated that the next payments are scheduled for the second half of 2018.

“At the same time, Magnit plans to consider the possibility of implementing a share buyback plan in 2018. It is expected that part of the shares purchased in this way will be used for long-term stimulation of the company’s management,” says Magnit’s official press release.

Based on the results of the first half of 2017, Magnit paid dividends in the amount of 115.51 rubles per share. However, on January 26 - for the first time in 11 years - the company announced the possibility of refusing to pay dividends in 2018. Magnit's IPO took place on the Moscow Exchange in 2006.

Source: https://russian.rt.com/business/article/482543-magazin-magnit-vtb-sdelka

Galitsky sold Magnit. But Krasnodar will not give up

Now his business is in the hands of the state.

Sergei Galitsky created Magnit almost 20 years ago. Today he sold most of his shares (29.1%) to the state-owned VTB Bank. The owner of Krasnodar will receive 138 billion rubles and will immediately leave the post of general director of Magnit; instead, the current financial director Khachatur Pombukhchan will manage the network. Galitsky himself will remain only a minority shareholder with a 3% stake.

“The time has come to change something in your life,” Galitsky said today at an investment forum in Sochi. - It was a good time. I founded this company. But nothing lasts forever. It was not an easy decision. The impetus was that investors do not see the future quite the same way as the founder. I shouldn’t stand in the way of the process; if investors want changes, they should get them.”

A little later, Galitsky said a touching goodbye to the Magnit employees:

Together with Galitsky, VTB Chairman of the Board Andrey Kostin announced the completion of the transaction. He stated that new management would be appointed at Magnit in the near future, and allowed a merger with other retailers operating in Russia. “A large platform is being created,” explained Deputy Chairman of the Board of VTB Yuri Solovyov.

– Sergey Nikolaevich [Galitsky] created a company on a global scale. It needs to change its organizational structure a little in accordance with modern requirements.”

Galitsky explained it this way: “I am an entrepreneur, I am still more focused on profitability, on the EBITDA of the company, on low debt, and the current market requires other things: it requires growth, it requires the number of discoveries, it requires for and aggression.”

Galician business had problems

The deal was carried out against the backdrop of a decline in Magnit's revenue.

• At the end of January 2018, the company's shares fell by 5%. This was due to the publication of financial statements for 2017: net profit decreased by a third and amounted to 35.53 billion rubles compared to 54.41 a year earlier. Soon Magnit refused to pay dividends to shareholders.

• At the end of 2017, Magnit for the first time in a long time lost to its main competitor - X5 Retail Group, which manages the Pyaterochka, Perekrestok and Karusel brands - in terms of revenue: 1.14 trillion rubles versus 1.28.

• In November 2017, Galitsky lost $606 million in one day after the chain’s stock prices collapsed following the publication of quarterly reports. In January, history almost repeated itself: after the company's shares fell by more than 5%, the businessman's fortune decreased by $250 million. And again because of reporting.

What about football?

Nothing will change here. Galitsky will remain boss of the club and will likely spend even more time with him. “I will focus on the club and youth football,” Galitsky said after the announcement of the deal with VTB.

Galitsky initially did not consider football as a business.

“I must love something in my life, besides my homeland and my child.” So I love football.

– Did you conceive it as a business?

– There is no business in football in Russia. “I said it a hundred times and I repeat it a hundred and first,” Galitsky noted in an interview with Forbes in 2013.

What do businessmen say about the sale of Magnit?

The first to criticize the deal was Alexey Krivoshapko , director of the Prosperity Capital Management fund, one of Magnit’s minority investors: “The law requires when purchasing more than 30% of the company’s shares to make an offer to buy back the securities to minority shareholders.

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They specifically bought a little less so as not to make it. This is absolutely disgraceful, the worst behavior on the part of a state bank . This suggests that he didn’t care about the market and minority shareholders; this is a slap in the face of all investors. This is unacceptable.

I think it will come back to haunt them.”

The founder of Euroset, and now the owner of a wine store in London, Evgeny Chichvarkin, wrote on Facebook: “Today the Gestapo bank nationalized Magnit, it will probably pay Galitsky 10-20% of the real value (in 2008, the same VTB and MTS promised to pay us about 20%, but did not intend to do so). I wouldn’t be surprised that this money will still have to be paid back.

In my experience, they will try to squeeze out half of this cache later. I’m willing to bet with anyone and anything that prices will soon become higher and the assortment worse, since this theft and irresponsibility are the core competencies of any state-owned company. He also sold it on time. It was necessary to hide under Medvedev.

While seven old men and one girl put Putin on the throne for life, what I feared most happened. State trade – back to the general store.”

Under Galitsky, Magnit was one of the five largest retailers in the world

• Galitsky began his career as a second-year student at the Faculty of Economics and National Economic Planning at Kuban State University. He worked in one of the first commercial banks in Krasnodar - he was invited there after the publication of an article in a financial magazine.

• In 1994, he founded the small wholesale company Transasia. The first store was opened in 1998 in Krasnodar under the name Cash & Carry. “In those days, we began to buy everything we could get for rubles.

This helped to always be in inventory,” said the businessman. Later, he changed his strategy, focusing on stores in residential buildings, and then changed the name of the chain to Magnit.

It was important for him to develop business in the regions: “To gain strength, I wanted to get as far away from competition as possible,” Galitsky recalled.

• Already in 2001, Magnit became the largest retail chain in Russia . It had 250 stores: Pyaterochka had about 80, Perekrestok had 30, and Seventh Continent had 25. By the end of 2005, Magnit had expanded to 1,500 stores.

• In 2012, Magnit set a Russian record for profitability. Having increased revenue by 35.2%, the company increased EBITDA (roughly speaking, earnings before taxes, depreciation and amortization) by 41.8% and net profit by 54%. In mid-2012, Magnit entered the top five largest retailers in the world by capitalization .

• In 2013, Magnit became the absolute leader in Russian food retail in sales, ahead of X5 Retail Group. “We still spent fifteen years chasing them. Fridman [the main shareholder of X5 Retail Group] has created a complex of losers in our country.

We were always second, we ran after them, and now we were already close, but then they made another deal to buy a new network, and again there was some kind of crazy distance between us. We knew the chase would be long, but we were too angry to let go.

We saw their mistakes and realized that we had a chance.”

• Now Magnit owns over 16,300 retail outlets - the most in Russia.

In February 2016, Galitsky stated that he intended to sell 1% of his shares annually, and a month later he admitted: “There was a period when I went to bed every day and I wanted to wake up and do business. But when you're 48 years old, unfortunately, you don't care if EBITDA is 9.7 or 9.8, because those are intangibles. I say “unfortunately” because it’s impossible to do two things well at the same time, and business definitely suffers from the fact that I’m involved in football .”

Source: https://www.sports.ru/tribuna/blogs/bluewhitenavy/1586122.html

Football instead of trade

Sergey Galitsky RIA Novosti Grigory Sysoev

“I will stay at the Krasnodar football club. I will focus on the club and youth football. I’m unlikely to return to the executive committee of the Russian Football Union,” TASS quotes Galitsky.

Who now owns Magnit retail chain

Since 2018, the Magnit chain has been developed by a new owner - it became known that since February, Khachatur Pombukhchan, previously known as the chairman of the board of directors, has been holding the post of general director. After Sergei Galitsky spoke about the sale of his share, Pombukhchan bought the shares on the stock exchange for $1,000,000 (RUB 57.2 million). As news portals wrote, the entrepreneur became the owner of 12,500 new shares of the Magnit retail chain, moneymakerfactory.ru reports.

After the former owner of Magnit, Galitsky, was left with three percent of the total share, he resigned, although today he still owns the business as a co-owner. To buy out a share, Pombukhchan needs to carry out about three hundred transactions, the largest of which was the purchase of 1,000 shares, and the remaining acquisitions were carried out gradually and in small parts.

A couple of years earlier, Pombukhchan was the owner of Magnit shares.
And most experts did not suspect that his appointment to the post of general director was very real. Moreover, he periodically lowered the share of shares down to 0.002%. Table 1: Distribution of shares between shareholders in two thousand and eighteen

OwnerShare (%)

VTB Bank	29,10
MarathonGroup	11,82
Sergey Galitsky (network owner)	3,00
KhachaturPombukhchan (former general director of the network)	0,01
Other owners (individuals and legal entities)	56,07
Total	100,00

Who is the new CEO

Until 2018, Olga Naumova was the head of the Pyaterochka chain of stores. At this time, she replaced Pombukhchan as manager, who unexpectedly decided to resign of his own free will. Olga took office on June 22, signing a three-year contract.

Olga has a higher education in marketing, supported by courses at Columbia University, as well as the French Institute INSTEAD. The new general director of Magnit has extensive experience in working in management positions, including in companies involved in the sale and distribution of products. In an interview with the media, Olga said that she would contribute to the further development of stores, increasing the quality of work.

How it all began

In July 1995, Sergei Galitsky, together with his partner Alexei Bogachev, opened the Thunder joint-stock company, which specializes in the wholesale supply of perfume products. 3 years later, the first store appears in Krasnodar. As sales volumes increase, Galitsky opens similar supermarkets in other cities of Russia, mainly working in the southern part of the country.

https://www.youtube.com/watch?v=qxQx3EMzL2M

At the beginning of the 2000s, all the stores owned by Galitsky united into one chain. In 2003, he registered an OJSC, and in two thousand and six he sold part of the shares, using the proceeds to open hypermarkets. So, in 2010, the Magnit-Cosmetic chain began operating, with its own brands.

How are things now?

The Magnit retail chain is one of the largest not only in Russia, but also in Europe. That year there were sixteen thousand retail outlets, of which:

three hundred fifty – shops;
two hundred forty-three – hypermarkets.

There are most supermarkets in the Southern, Central, Volga, and North Caucasus districts. According to the rating of experts from InfoLine-Analyst, Magnit is in 1st place in the list of Russian representative offices. It also holds the seventh position in the ranking of companies with the largest revenue.

Today, it is this network that provides about twenty-five% of revenue from all retail sales in the Russian Federation. Average sales revenue annually is one trillion seventy-four billion rubles. The number of network employees is two hundred eighty-nine thousand three hundred sixty-six people.

Source: http://RoadNice.ru/news/komu-sejchas-prinadlezhit-magnit-torgovaya-set/

An era has passed: Galitsky sells control to VTB

2018-02-16T13:41+0300

2018-02-16T18:58+0300

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An era has passed: Galitsky sells control of Magnit to VTB

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RIA News

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RIA News

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MOSCOW, February 16 – RIA Novosti. The founder of the Magnit retail chain, Sergei Galitsky, is leaving the company: he sells a blocking stake in the retailer to VTB Bank, leaving himself only a small stake in the company, and leaves the position of general director and member of the board of directors of Magnit.

On Friday, VTB entered into an agreement to purchase a 29.1% stake in Magnit, one of Russia's largest retailers, from the chain's founder, Sergei Galitsky. The transaction amount will be about 138 billion rubles, it requires the approval of the Federal Antimonopoly Service (FAS) of the Russian Federation.

The agreement was concluded within the framework of the Russian Investment Forum in Sochi.

The entrepreneur will retain a small stake - about 3%. He also intends to resign as CEO and member of the board of directors of Magnit.

The company's board of directors on Friday will consider Galitsky's resignation and the appointment of Khachatur Pombukhchan, the retailer's financial director, to the position of CEO.

The history of Magnit, the largest retail chain in Russia in terms of the number of stores, which some time ago also occupied a leading position in terms of revenue and capitalization, began in 1994. Then Sergei Galitsky, a year after graduating from the Faculty of Economics and National Economy Planning at Kuban State University, founded the Transasia company with partners, which distributed cosmetics and perfumes.

In 1995, it was decided to split Transasia, Galitsky began to develop a new company - Thunder. Subsequently, it will become the operating structure of Magnit. In 1998, Thunder opened the first grocery store in Krasnodar in the Cash & Carry format.

However, the company later decided that this format did not meet the needs of the market at that time, so in 2000, all stores operating at that time were converted into “convenience stores.” Their network was called “Magnit”.

After this, the company consistently develops, increasing the number of its stores and revenue. In April 2006, Magnit conducted an initial public offering (IPO) in Moscow, and in 2008 a secondary offering (SPO) on the London Stock Exchange.

In 2010, the retailer opened the first Magnit Cosmetic store, which in a few years will become the most dynamically developing format of the chain.

At the end of the first quarter of 2013, Magnit overtook its main competitor in terms of revenue - X5 Retail Group (manages the Pyaterochka, Perekrestok and Karusel chains). The network maintained this status for several years. However, in 2014, Russia was gripped by an economic crisis, which hit Magnit hard. A large number of its stores were opened in small towns, and the company was faced with a decline in the purchasing power of the population.

The growth rate of Magnit's revenue began to slow down. At the end of the fourth quarter of 2016, X5 Retail regained its leadership in the Russian food retail market (Magnit’s revenue for 2016 was higher, but it included sales of the Magnit Cosmetic chain). X5 consolidated its position in 2017: at the end of last year, the company became the undisputed market leader in terms of revenue.

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Creeping Change

Against the backdrop of declining sales of Magnit, the company’s capitalization also decreased. Since August last year, Magnit shares have fallen in price by more than 2 times. According to the results of trading on February 13, the market capitalization of X5 Retail Group exceeded the capitalization of Magnit on the Moscow and London exchanges.

At first, Galitsky remained confident in the actions of the network’s management. He actively participated in telephone conferences with analysts, convincing them that Magnit was focused on the efficiency and profitability of the business, and not on maintaining first place.

However, changes did begin to occur.

In the fall of 2015, the management team began to change, and after some time the founder of the company completely stopped publicly talking about the results of the network. At the same time, Magnit’s top managers assured that the retailer’s founder continues to participate in the company’s operating activities.

Galitsky has said over the past few years that he may gradually sell 1-2% of his shares in the retailer. For example, in February 2015, he sold just 1% of the shares of Magnit.

Last July, at a meeting with analysts, the entrepreneur even admitted that his stake in the company could even drop to zero, although Magnit’s financial director Khachatur Pombukhchan explained that the businessman’s words should not be taken as a real intention to sell all the shares he owned.

Historical agreements

However, the businessman still leaves Magnit - although, probably, earlier than planned. On Friday, VTB agreed to purchase a 29.1% stake in the retailer from Galitsky. The founder of the network will retain about 3% of the company's shares.

The transaction amount is 138 billion rubles, Galitsky is selling 29.656 million shares at 4,661 rubles per share. This is lower than the closing price of trading in Magnit shares on the Moscow Exchange on Thursday (it amounted to 4,850 rubles) by 3.9%.

First Deputy Chairman of VTB Yuri Solovyov told reporters on the sidelines of the forum that VTB does not plan to increase its stake in Magnit. According to him, the bank intends to remain a shareholder of Magnit for at least two to three years. According to the head of VTB Andrey Kostin, the bank is not yet planning other transactions in retail.

What's next?

Galitsky himself called the decision to sell his stake difficult. “I headed the company for 25 years. This is quite a long time. And I think it's time to change something in my life, because I think it was a good time. This was a difficult decision for me because it was too long a process.

After all, I founded this company, but time passes, nothing lasts forever,” he said after signing the agreement.

He pointed out that the retail network needs to meet modern market requirements. “I should not stand in the way of this process, and if investors want changes, they should get them.

Therefore, when I was thinking about selling, VTB was the best thing that could happen in this case,” Galitsky emphasized.

Now the 50-year-old businessman, whose fortune Forbes estimated at $6.8 billion in 2017, plans to focus on the development of youth football. Galitsky is also the owner and president of the Krasnodar football club, which was founded in 2008. At the same time, a children's sports school was created at the football club. In 2016, the Krasnodar football stadium opened with a capacity of 34 thousand people.

Source: https://ria.ru/20180216/1514771781.html

A terrible end. Why billionaire Galitsky decided to leave Magnit | Billionaires

On the same day, Galitsky was already in Krasnodar. Hundreds of people came to the Magnit head office to say goodbye to him. “The market is not pricing us fairly, we have the largest EBITDA, the largest profit,” said the billionaire, addressing his now former colleagues. — We are a very worthy company, and it cannot consist of one person.

VTB provided a chance, I thank them for helping the guys from Krasnodar lead the company in this transaction. Nobody died, life goes on. I am an adult, it is very difficult to bear such a psychological burden. I should probably leave and more ambitious and younger people should come.” After that, the billionaire got into the helicopter and left Magnit.

Forbes recalls how he created his brainchild.

Why is everything so bad

Magnit's problems began back in 2016, when the retailer cut its profits for the first time. Galitsky himself explained this by the fact that the chain was actively investing in updating old stores, opening new ones, launching and increasing its own production, for example, investing in a mushroom farm in Krasnodar.

Then the situation worsened: Magnit’s net profit in 2017 decreased by 34.7% compared to 2016 - to 35.5 billion rubles. Following the financial performance, both the price of shares fell (from more than 12,900 rubles in August 2015 to less than 4,500 at the beginning of this year), and the fortune of Galitsky himself, who, despite the reduction of his stake in the company, remained its largest shareholder. In 2014, Forbes estimated Galitsky’s fortune at $10.3 billion; now it does not exceed $4 billion.

What brought down Magnit? It’s paradoxical, but the company, which year after year was included in the ranking of the most innovative companies according to Forbes, has ceased to respond to the challenges of the time. Galitsky managed to build efficient logistics within the company and build the largest federal network of stores. In the 2000s, this approach led Magnit to success, but now it turns out that churning out stores that, according to one competitor, resemble tin sheds is no longer enough.

“Many of the Magnit stores that have opened recently resembled stores from the 1990s. Meanwhile, the consumer has changed a lot, and ideas about what retail should look like have changed,” says Victor Dima, senior analyst for the consumer sector at Aton. He notes that competitors have caught on to this trend: the same X5 has improved its appearance and product range by undergoing this transformation.

According to the expert, after a very long growth phase, Magnit was faced with the fact that it had an old base of stores that required updating.

“The company was very focused on growth and market share, which was the right strategy, but competitors were very effective in focusing on improving the appearance of stores, improving store occupancy and management.

It's just competition. And the retail sector is more competitive than many other sectors in Russia,” concludes Dima.

“The average check is falling, revenue is also falling, and the gap that arose with Pyaterochka due to the fact that they later began to renovate the store began to put a lot of pressure on their financial performance,” a senior portfolio manager describes Magnit’s problems Management Company "Kapital" Vadim Bit-Avragim.

Macroeconomic factors played their role - a combination of slowing inflation and falling household incomes. “Magnit operates mainly in regions where real incomes continue to decline,” recalls Bit-Avragim.

Da Vinci Capital asset manager Svyatoslav Arsenov recalls that at the beginning of 2016, Vladimir Gordeychuk, a minority shareholder of the company, who had worked with Galitsky since its inception, left the post of head of Thunder. At the company, he dealt with operational issues, such as assortment, logistics, which need to be controlled on a daily level, and his resignation had a negative impact on what was happening in the retailer, the analyst believes.

It was the problems with management that became the factor that led to poor results over time. “Management, management, assortment formation - all this affects the margins of the business, some very small numbers, which, given the overall huge turnover, end up being significant,” Arsenov sums up.

Make way for the young

“I think that the sale of his share is a consequence of the fact that he realized himself as an ineffective manager. He realized that he could not cope with the competition, which was only growing in this segment, so he calculated his strength and decided to enter the cash game,” says Roman Andreev, asset manager at SR Solutions.

“I think he had an idea to sell his stake to someone, but there was no such opportunity. I think that the person was “overripe” for this business and decided that he needed to rest, and “Magnit” would be developed by someone else,” says Bit-Avragim.

Galitsky will obviously be vacationing in Krasnodar. He is one of the few billionaires who decided not to leave his hometown and invested a lot of money in it. Last year he opened a landscape park worth 4 billion rubles. In Krasnodar, Galitsky owns a football club of the same name; he built a stadium worth $460 million. Galitsky himself has already stated that after the sale of Magnit he will focus specifically on the club and the development of youth football.

Source: https://www.forbes.ru/milliardery/357387-uzhasnyy-konec-pochemu-milliarder-galickiy-reshil-ostavit-magnit

The founder of Magnit, Sergei Galitsky, is leaving the company. What will happen to the retail network and what will the businessman do? — Meduza

The founder of the largest Russian retail chain Magnit, Sergei Galitsky, announced that he was selling his stake in the company and ceasing to develop it.

Galitsky, one of Russia's most successful entrepreneurs, argues that investors see the company's prospects differently than he does - and now it's time for him to get out of business. The state bank VTB becomes the largest shareholder of the network.

Its director, Andrei Kostin, promises that Magnit will retain its name and will develop using the bank’s resources.

What will happen to Magnit?

Magnit was founded by Sergei Galitsky in the mid-1990s in Krasnodar. Initially, the businessman focused on selling household chemicals, but then he started selling food products and eventually created the largest retail chain in Russia - and one of the largest in the world. Now it includes more than 16 thousand stores - mainly supermarkets within walking distance with low prices.

In 2015, Magnit was included in the ranking of the most innovative companies in the world according to Forbes magazine. In terms of capitalization, the chain is one of the five largest global retailers. Magnit's main office is still located in Krasnodar. The network is developing largely due to small cities with a population of less than 500 thousand people.

Magnit shares are traded on the stock exchange; about 65% of the company's securities are in free circulation. Galitsky until now owned the largest share - a little more than 30%. On February 16, at the economic forum in Sochi, he announced that it was time to sell the shares. The buyer was the state bank VTB, which will receive 29.1% of the shares for 138 billion rubles. The deal must be approved by the Federal Antimonopoly Service.

The head of VTB, Andrei Kostin, promised that Magnit will not change its name and will continue to operate in the same way as before. Using the resources of the state bank, it is planned to further develop the retail network, as well as create a delivery service together with Russian Post. Mail couriers, as RBC writes, will deliver Magnit products, and they will also be available for purchase at post offices. It is assumed that the companies will combine logistics and transport networks.

VTB has been working with Russian Post since 2016: the bank and the postal service have a joint Post Bank, created on the basis of Leto Bank, which was part of the VTB-24 structure.

After Galitsky’s departure, Magnit will be led by the chairman of the network’s board of directors, Khachatur Pombukhchan.

What will Sergey Galitsky do?

“Magnit” is Galitsky’s main brainchild, and the billionaire (16th place in the Forbes ranking with $6.8 billion) did not hide his emotions when he announced the sale of his share and leaving the business. Over the past few years, Magnit has been developing more slowly than before: at the end of 2017, net profit decreased by a third to 35.53 billion rubles. The company was behind the X5 Retail Group chain in terms of revenue and decided not to pay dividends to shareholders.

It was the dissatisfaction of shareholders that Galitsky explained his departure. According to the businessman, he and the investors had different views on the development of the company. He did not say which investors he was talking about, given that Galitsky himself was the largest shareholder of the company.

The businessman said that after the sale of the business he would remain living in Krasnodar. Galitsky did a lot for the city, including building a stadium for the Krasnodar football club and a park next to it, beloved by local residents. The 50-year-old entrepreneur plans to focus on working for the club, which thanks to his money and efforts has been playing in the Premier League since 2011. He has no intention of returning to the executive committee of the Russian Football Union, where Galitsky worked from 2014 to 2016.

Source: https://meduza.io/feature/2018/02/16/osnovatel-magnita-sergey-galitskiy-uhodit-iz-kompanii-chto-budet-s-torgovoy-setyu-i-chem-zaymetsya-biznesmen