Experts explained the importance of keeping Yandex in Russian jurisdiction
The Dutch Yandex N.V. has agreed to sell the Russian business to a consortium of private investors and managers of the company. The transaction amount will amount to 475 billion rubles, which will be paid in two stages. The main owners of Yandex will be its managers. Why was it fundamentally important for Russia to keep this asset in its jurisdiction and what consequences will this transaction lead to in the future?
The Netherlands-based Yandex N.V. announced an agreement to sell the Russian business to a consortium of private investors and managers of the company. The transaction amount will amount to 475 billion rubles. The parameters of the agreements take into account the standard requirement of the Russian authorities for the sale of assets by non-residents at a discount of at least 50% to the market.
The sale will take place in two stages, according to RBC. At the first stage, a controlling stake in Yandex (about 68%) will be sold for about 230 billion rubles and up to 67.8 million economic shares of Yandex N.V. The monetary part will be paid in yuan. It is expected that the first stage will be completed in the first half of the year.
As a result of the transaction, Yandex Joint Stock Company (MKAO), an international company registered in the Kaliningrad Region, will become the parent company instead of Yandex N.V.. By July 31, 2024, the Dutch company must change its name and stop using Russian business brands, according to a press release from Yandex.
The main owners of the company will be the ZPIF Consortium. The first one is headed by Yandex managers, their exact composition is unknown. Other shareholders will be the structures of Alexander Chachava, founder of the Leta Capital venture fund, Pavel Prass, head of the Infinitum depository, Lukoil Group and entrepreneur Alexander Ryazanov. The shares are not specified.
Artem Savinovsky will remain the CEO of the company. Yandex will retain the businesses, services and assets of the Yandex N.V. Group, with the exception of foreign startups (Nebius, Toloka, Avride and TripleTen) and a data center in Finland. In addition, Yandex will grant Yandex N.V. limited rights to use some of its technologies until the end of 2024.
The company notes that it will continue to develop search, urban, entertainment and educational services, as well as cloud technologies, autonomous cars, artificial intelligence technologies and other promising areas.
It is noteworthy that the weighted average market capitalization of Yandex N.V. amounted to about $ 10.2 billion (918 billion rubles), and the assets included in the transaction generated more than 95% of the group's revenue for the first nine months of 2023, Interfax reports.
The Kremlin welcomed the deal. "Of course, it is important for us that the company continues its work in this area. In this regard, the sale agreement reached by the shareholders is welcome. The Russian management of the company will remain the main owner," said Dmitry Peskov, the press secretary of the president. Experts also note that
The preservation of Yandex in the Russian jurisdiction will have a positive impact both on the company itself and on the development of the domestic IT sector.
Yandex is one of the oldest Russian companies, known all over the world for its developments, projects, and traditions. The restructuring process was not easy, but in the end the parties managed to come to an agreement," said Sergey Plugotarenko, CEO of ANO Digital Economy.
He calls the preservation of the Yandex management team a special feature of the deal. "I would like to note that the company will be managed by its management. For this purpose, a "Fund of Managers" has been created. This is a very important and right decision for the company. Russia's Yandex will remain a private, independent, public company," the source stressed.
It was also possible to take into account the interests of investors, Plugotarenko added. "The new parent company will be MKAO Yandex. She will retain all of the group's assets, which generate 95% of revenue. Given the recent growth in Yandex's business, I am sure that the company's attractiveness on the Moscow Stock Exchange will remain. Moreover, the company has always been transparent to investors and took into account their interests," the expert noted.
In addition, the Russian Yandex will retain all technologies, innovations, and services for citizens and businesses, the source continued. "AI, search, urban, and entertainment services will develop. I am convinced that Yandex will be able to successfully grow in Russia and compete with foreign platforms and technologies. Soon we will see new successes of the company," – said Plugotarenko.
"The deal marks the end of a long period of uncertainty in the history of Yandex. Now it became clear that the company would continue to be led by its old managers, who became co-owners of the business. These are people who are well known in the professional community, including at the international level," adds Artyom Kiryanov, Deputy Chairman of the State Duma Committee on Economic Policy.
"As a result of the transaction, Yandex remained an independent company. In the future, this status will allow her to continue her activities abroad. In addition, there are no people in its leadership who would be sanctioned. It will also have a positive impact on the corporation's projects outside Russia," the source notes.
"Keeping Yandex in Russian jurisdiction will help both the company itself and our citizens. The company is one of the most dynamically developing IT corporations in the world. Technologies are being developed there that will determine the image of the future. In particular, research is underway in the field of unmanned vehicles, as well as artificial intelligence and neural networks," he emphasizes.
"The further work of Yandex in Russia will have a positive impact on the development of the IT industry in the country. The organization needs to train a lot of specialists who will remain in our country and in the future will become its technological elite. This will allow us to confidently be in the top of the countries with a developed information industry," Kiryanov concluded.
"We are dealing with one of the most important Russian companies in the IT sector.
Yandex owns taxi and delivery services, a search engine, and online stores. In addition, the corporation is a large taxpayer, so its preservation was important for the domestic economy," said German Klimenko, founder of Liveinternet and MediaMetrics, a former adviser to the President of Russia on Internet development.
"Due to sanctions and discrepancies within the team, it was necessary to separate Yandex N.V. and Yandex. But the larger the company, the more difficult the separation is. Therefore, this process took a very long time. This is probably one of the most difficult legal transactions in Russia," he notes.
"In order for the deal to take place, it was necessary to agree on many details. First, to divide the assets and developments among its participants, since Yandex N.V. probably wanted to get its share. In addition, in order to reach an agreement, it was necessary to determine the value of the company, the terms and amounts of payments, as well as the final form of ownership of the corporation," the interlocutor emphasizes.
"For Yandex itself, retention in Russian jurisdiction is important for several reasons.
Firstly, it makes it easier to work with big data, as it involves close cooperation with the government. In addition, the completion of the separation process will attract the attention of investors," the expert emphasizes.
"It is also important to understand that its employees are very important for an IT company. Yandex is primarily not hardware, but brains. It is the employees who largely determine the company's affiliation to our country. Therefore, it is very important to attract Russians to work in this sector, and the growth of the corporation may well provide employment for the population in the future," Klimenko concluded.
Oleg Isaichenko