The deal to split the Russian internet major Yandex could be completed by the end of 2023, with a seven-investor consortium potentially getting 7.28% in the Russian part of the company (total of 50.96%), Forbes reported, citing unnamed sources close to the deal. Yandex is reportedly valued at $5.5bn after the mandatory 50% discount on foreign exit deals from Russia.
The Dutch-registered Yandex N.V. is seeking to sell its stakes in its primary revenue-generating business in Russia. However, while several oligarchs have expressed an interest in taking over the Russian business, a deal has yet to be done. Any deal must ultimately be approved by the Kremlin.
Previous reports suggested that state-controlled bank VTB will participate in the deal, along with a trio of Russia's richest oligarchs.
According to Forbes, the deal reportedly still includes VTB, as well as RosSelkhozBank (RusAgroBank) and other top 10 Russian lenders.
Among the potential investors Forbes sources also name oligarch Vladimir Potanin and tech investor Ivan Tavrin, founder of Faberlic cosmetics retailer, and State Duma deputy Alexei Nechaev, pension fund Gazfond of gas giant Gazprom, and the head of the Russian Direct Investment Fund Kirill Dmitriev. Russian independent oil major Lukoil could also reportedly enter the deal through its pension fund.
The deal discussed between the company and the government was previously mediated by ex-finance minister and veteran policymaker Alexei Kudrin. Sources told Forbes that the deal has been much delayed due to the US sanctions against Kudrin and anti-war statements of Yandex founder Arkady Volozh.
Previously Kudrin was reportedly “supposed to organise the deal and coordinate the details, including the terms of transferring intellectual property licences and technology projects to Volozh," sources reminded Forbes.
However, now the deal moves ahead with Kudrin pushed aside, with no clarity on whether the veteran policymaker is still slated to succeed Volozh and get an equity stake in Yandex. The restructured part of Russian Yandex will reportedly be managed by the investors and the new board, and not Kudrin and his team.
Potanin and an independent member of Yandex board, one of the founders of United Financial Group Charles Ryan, have emerged as the leading voices in the restructuring of the company, sources told Forbes.
Other sources claim that some potential investors in Yandex are seen as "frontmen" for billionaire Yuri Kovalchuk and his partners, who could be aiming for as much as 40% of Yandex. Foreign investors would reportedly retain some stake in the company under the current deal scenario.
As for Volozh, previous unconfirmed reports claimed that his anti-war statements will shave at least $150mn from his proceeds for the Yandex deal. The new report by Forbes also claims that the foreign part of Yandex could receive much less IP than previously expected (international businesses of driverless cars, educational services, cloud and data management technologies).
The sources surveyed by Forbes believe that it would take the international Yandex team up to a year to rewrite the code for withheld technologies, and do not see this as a “disaster”.
Volozh's family trust (45.1%) and the company's board members, managers and employees (6.6%) were the main owners of the voting shares. However, the Volozh family trust no longer has any voting rights in the company. In 2022, the trust transferred its voting rights to the company's independent board members, according to a spokesperson for the family.
The state Public Interest Fund established in 2019 controls a "golden share" in the company. It is understood that the PIF will drop down to the Russian entity as a result of the restructuring.
Prior to Russia's military invasion of Ukraine, Yandex was hailed as an up and coming global technological group, looking to boost the monetisation of its technologies on the one hand and leverage these technologies to support its international expansion on the other. Apart from e-commerce, its investment case previously rested on developments in transportation, fintech and foodtech, with the developed ecosystem seen as a key advantage. Yandex was Russia’s leading developer of AI and driverless technologies.