Liniya Prava, working with DeHeng Law Offices in China, has advised ChinaNetCenter (CNC) on its acquisition of a 70% share in the charter capital of LLC CDN-video from ZAO Leader, its subsidiary LLC CDN-Invest, and three business angels.
According to Liniya Prava, the main features of this project include: "(1) deal structuring under Hong Kong law (framework documentation) and Russian law (documents for dispositive transactions); (2) using new instruments of Russian civil law for M&A structuring, such as representations and warranties, indemnity, irrevocable PoAs, option agreements, etc.; (3) ensuring protection of intellectual property rights (patents) and other intangible operating assets required for successful functioning of the company after the change of control; and (4) consideration of the 'Skolkovo' resident status - the transaction was structured to ensure that CDN-video will preserve its 'Skolkovo' resident status with all related preferences after closing."
The CNC Internet service platform was founded in 2000 in China.
Liniya Prava describes CDN-video as "one of the leaders of the Russian CDN market. The CDN-video network consists of 400 servers in 17 cities in Russia, as well as in Ukraine, Kazakhstan, Georgia, Moldova, Germany, the Netherlands, the United States, Malaysia and Singapore. CDN-video is a resident of the innovation Center Skolkovo." The firm also reports that "Leader is the largest management company in Russia in terms of volume of assets under management. One aspect of its business is investing into high-tech projects with a large capitalization potential. In order to manage such projects, a venture capital arm (fund "Leader-innovations") was established to administer the assets of high-risky (venture) capital investments."
The Liniya Prava team was led by Partner Vadim Konyushkevich, who commented that: "In my view, this case may be regarded as a good practice example of successful growing-up of a high-tech innovation business in Russia. A startup of programmer-enthusiasts, where there was only an idea in the beginning, was supported by the Innovation Center Skolkovo. Further investments from a major Russian institutional investor ZAO Leader resulted in fast and steady transformation of a small company into a significant player in the Internet industry segment. The logical conclusion of this process was the acquisition of the majority stake by a large foreign investor. One may witness the importance of this transaction for the Russian high-tech market as such projects demonstrate the growing interest of foreign investors in Russian innovative companies."
Konyushkevich's team included lawyers Kirill Rubashevskiy, Gleb Bazurin, and Aleksandra Braterskaya.