Page 7 - bne_Tech_07_2020

Leaders
July 2020 www.intellinews.com I Page 7
According to the terms of the placement, VTB and two other private investors will each invest $200mn and be locked in for two years, during which time the maximum stake they could each acquire in Yandex is 3.99%, Sberbank CIB wrote on June 25.
"Given the separation of Yandex's prior JVs with Sberbank, co-operation between VTB and Yandex looks to be increasing, with VTB Capital's CEO Alexei Yakovitsky joining Yandex's board late last year," Sberbank CIB reminds.
At this stage, VTB's stake in Yandex will be very small, and it will be more interesting to see if
and how co-operation between VTB and Yandex develops, the bank suggests.
In the meantime, on June 25 Reuters reported that Yandex had expanded the share issue to 5.8% of share capital (possibly 6.2% if Goldman Sachs exercises its option) and rose almost $1bn versus $0.8bn planned.
The issue was strongly oversubscribed and $600mn was accounted for by VTB and the investment vehicles of Russian billionaires Roman Abramovich, Alexander Abramov and Alexander Frolov.
Russia's X5 group to unify delivery services
Russia's largest traditional retailer X5 Retail Group has announced the launch of Okolo (Nearby) express delivery platform, unifying its Perekrestok. Bystro and Pyaterochka.Delivery express services available from 439 stores in five cities.
As reported by bne IntelliNews, amid the coronavirus (COVID-19) lockdown X5 emerged as Russia's largest e-grocer and rapidly expanded delivery capacity, with the rival Magnit trying
to catch up with its digital transformation and testing delivery solutions.
Customers will continue making purchases through both the Perekrestok and Pyaterochka platforms, while deliveries will be now handled by Okolo couriers, in branded uniform.
"X5 started its e-commerce operations in 2017 through stock-up services (Perekrestok.ru), which is the main contributor to total online sales (72% in April-May), followed by the aforementioned express delivery services, launched in 2019,"
VTB Capital (VTBC) reminds on July 8.
VTBC sees e-grocery as being the fastest growing e-commerce niche in Russia: according to
Infoline’s estimates, it could surge 17-fold by 2024 from RUB42bn ($590mn) last year, making up 3.5% of the food retail market. In that, express delivery is the most rapidly growing channel, expected to add 25pp from 2019, to 27% by 2024.
For X5, e-grocery is an important pillar in the company's growth strategy as it aims at a 15-20% share of online food retail, while the upper boundary would mean 6% of total sales by 2024, VTBC estimates.
Another channel of expansion for Okolo is the addition of ready food market deliveries. The main competitors in this segment are Yandex.Eda, present in 112 cities and connected to more than 14,000 restaurants, and Delivery.Club, with 150 cities and more than 16,300 restaurants.
"Both services already overlap with X5 in the food express delivery segment, via Yandex.Lavka and Samokat respectively," VTBC notes.
As X5 shares have gained 78% since mid- March and 20% from early June, VTBC sees the name as "fairly valued" and maintained a Hold recommendation, trading on 2020 forecasted Enterprise Value/Ebitda of 6.2x.