Page 52 - bne magazine September 2023

52 I Eastern Europe bne September 2023
The CEO of Russia's internet giant Yandex has publically slammed Putin's war in Ukraine, in a statement that will likely see him stripped of all his wealth in Russia. / bne IntelliNews
The Kremlin has become increasingly aggressive in grabbing assets of those that oppose it. Initially foreign companies were told they would be permitted to exit the Russian market, but only if they agreed to offer a 50% discount on the valuation as well as make a “voluntary” 10% payment to the government.
More recently the Kremlin has turned to outright nationalisation, taking over the businesses Finnish and German energy majors Fortum and Uniper in June, and food producers Danone and Carlsberg in July, which will be handed to Russian President Vladimir Putin’s cronies.
In the same month Putin has instructed the government to make it even harder for “naughty” (nekhoroshi) Western companies to work in Russia and those that do not want to play by the Kremlin’s rules to exit.
Over the last year, while the board worked on restructuring the company to reflect new political realities, Volozh has been working to support the company’s engineers that wanted to leave Russia. Since the war started there have been two big emigration waves – one immediately after the war started and another in September last year during a partial mobilisation that began on September 21 – where an estimated half of the 1mn that left the country are believed to have worked in the IT sector.
According to bne IntelliNews sources, Volozh has been agonising about the decision to speak out against the war. As he said in his statement, “I am known
as one of the founders of Yandex. In our minds, when we founded it, we weren’t only creating a technology company. We were helping to create a new Russia – open, progressive, integrated into the global economy, and able to bring value to the world beyond natural resources,” Volozh said in the statement.
“Yandex was made possible thanks to the unbelievable engineering and tech talent that we were able to attract, retain and cultivate... Since the start of the war, I have been focused on trying to support the talented Russian engineers who took a decision to leave the country.
IntelliNews. “Although I moved to Israel in 2014, I have to take my share of responsibility for the country’s actions.”
Most of Russia’s leading businessmen have issued very guarded statements on the war, afraid of being dispossessed. One exemption was Oleg Tinkov, the owner of Tinkoff Credit Systems (TCS) that owns Russia’s only purely online bank that is listed in London and was worth more than $1bn before the war broke out. After unabashedly criticising Russia’s decision to invade Ukraine
last year, he was forced to sell his bank to fellow tycoon Vladimir Potanin for “pennies on the dollar” and fled into exile in Mexico.
A similar fate now almost certainly awaits Volozh, who still owns some 8% of the New York-listed Yandex, known as “the Russian Google”, and formerly the most valuable tech company in Europe with a market capitalisation of around $30bn pre-war.
The Russian part of Yandex is still making money and posted 55% year- on-year growth in top line revenues to RUB183bn ($2bn) in 2Q23 in July, expanding by 55% for 1H23 overall as well to RUB346bn.
Volozh stepped down as Yandex CEO and left the board of directors in summer 2022 when he wrote a farewell message to his staff. The EU left the market guessing on Yandex’s fate after designating him in
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its sixth package of sanctions for Russia's invasion of Ukraine.
Yandex’s parent company recently announced that it would divest its Russian business, but was planning to keep hold of four technology startups which it hopes to grow outside Russia.
The process of breaking Yandex up into its Russia and international businesses is ongoing. Trading in Yandex shares was halted shortly after the war started, but in June Nasdaq said that it would not delist the company if it sold off its Russian assets, leaving Volozh and his international shareholders with the international assets that would remain in the US listed entity.
Former Finance Minister Alexei Kudrin has been advising the Yandex Board
on the restructuring, including the
plan for Yandex’s parent company to divest all Russia-based assets. Several of Russia’s leading businessmen, including Potanin, have expressed an interest in buying, although no concrete deal has been reached yet.
If Volozh was hoping to get paid something for his remaining stake in the company as part of the deal, those hopes will have died now. But he will have certainly understood he took this risk when he condemned the war.
“He won’t be destitute, but he is no longer a wealthy man,” a source close to the company told bne IntelliNews.