Unprofitable Telegram raises $1B: more questions than answers

In January, we offered to dive into the events around the Telegram messenger. At that time, the app phenomenon was analyzed by major sources in connection with political events in the United States. The publication The Information exclusively announced the negotiations of the founder of Telegram Pavel Durov with potential investors about the financing of $1B. After that, Durov partially refuted this information, but not information about a possible loan. It is a loan, not a sale, merger or IPO, that would leave the project independent of investors.

Yesterday, Pavel Durov announced a $1B bond sale to big investors. From a joint statement from two Abu Dhabi funds, Mubadala Investment Company and Abu Dhabi Catalyst Partners, they each invested $75 million in the project in exchange for five-year pre-IPO bonds. It also cites the deal participants as saying that it is a strategic partnership to strengthen Telegram’s presence in MENA region. At least, the company plans to open a representative office in Abu Dhabi, and in early February, Durov already met with the Crown Prince of Dubai.

According to sources, the Russian Direct Investment Fund (RDIF), whose partner is Mubadala Investment Company, also took part in the deal. However, the investment from RDIF was denied by Telegram Vice President Ilya Perekopsky. 

Telegram placed five-year convertible bonds on March 12, causing “a rush of interest” among investors. The names of other buyers were not disclosed. It is known that applications were accepted by checks starting from $500 000 and bond holders will be able to convert the bonds into shares with a 10% discount to the offering price if the company goes for IPO in the future.

The raised funds will help Telegram to cover its obligations to previous investors. According to the financial statements, which were sent to potential “investors”, the company now has a debt of $600M. The audit analysis of Telegram’s financial activities for 2018–2020 shows a large difference between liabilities and assets — experts note the significant financial risks of the company.