Page 38 - bneMag Dec22

38 I Cover story bne December 2022
develop the business further, according to bne IntelliNews sources close to the deal. However, none of these details have been formalised yet.
For the international investors, a deal will end the dream of owning part of “the Russian Google” as this part of the business will remain in Russian hands. They will in effect be left with a portfo- lio of very valuable assets, but not in the core search and e-commerce segments that they originally bought.
“If the deal goes through then the inter- national investors will retain some very valuable assets like the self-driving car business, but the Google of Russia part will be sold off,” a source close to Yandex, who didn’t want to be named, told bne IntelliNews. “The investors will get paid for this as the Russian business will be sold by Yandex NV, so they can take some money out, but then they have to decide if they want to stay in as the nature of the business will have changed.”
While in theory it is possible for Yandex NV to sell its Russian assets to local investors in dollars that can be repa- triated, in practice any international transfer of on this scale needs special approval by the Central Bank of Russia (CBR). Given the current CBR gover-
nor Elvia Nabiullina used to work for Kudrin, his appointment to husband the deal through is also taken as a sign that the CBR approval for repatriating any money paid by the Russian investors for the Russian business will be approved.
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However, as the CBR has a de facto veto over the deal, some worry that this lever- age will be used to cap the price, and the sale of the Russian assets could happen at a deep discount to the previous market value.
There is also a question mark over
the technology transfer permissions involved in splitting off the Dutch entity as currently regulations call for the government’s approval to transfer any Russian-registered technology licenses out of the country, the New York Times reported the same day, citing a person familiar with the matter.
Yandex went public on the Nasdaq back in 2011 with an $11bn valuation, and has been an investors’ darling in recent years, significantly outperforming the rest of the market. The company’s busi- ness was immediately hit by Russia’s war on Ukraine.
On February 28, after the stocks of Russian tech companies, including Yandex, fell sharply, Nasdaq stopped trading them due to regulatory concerns.
In mid-March, Yandex announced
it was exploring different “strategic options, including disvestment” for a range of its assets.
Soon afterwards, the company’s delivery and mobility activities were stopped or threatened in the US, UK, France, Latvia and Estonia.
In March and June, respectively,
the company’s deputy CEO Tigran Khudaverdyan and its founder Arkady Volozh were sanctioned by the Euro- pean Union, but not the company itself.
In April, to avoid a default, Yandex scaled back many planned investments and withdrew its financial guidance for the year.
In August, Yandex did sell its news service and homepage to its archrival VK Company – which is even more under Kremlin control than Yandex itself.
By the summer, compromises with the authorities led the company into a trap. Yandex was divided internally, as “some top managers left the country and are trying to salvage what they can from abroad; while others remain in Moscow and are determined to save Yandex’s Russian business,” local media reported.
Amid these events, a significant frac- tion of the 19,000 staff left the company or were moved to such other countries as Serbia or Uzbekistan. By August, over 10% of the employees had left, reported Bloomberg.
VEON/VimpleCom in a copycat deal
In a very similar deal to the mooted Yandex restructuring, the Dutch tele- coms holding Veon has agreed to sell its daughter company, the Russian mobile phone operator VimpelCom – operat- ing under the Beeline brand in Russia and one of the big three companies – to the its Russian top management, Veon and VimpelCom said on November 28 reports Vedomosti. The deal is expected to close by early June 2023.
"A group of top managers of the company, headed by CEO Alexander Torbakhov, has entered into an agree- ment to buy the company from the Veon holding," VimpelCom said as cited by the Russian daily.
VimpelCom is an iconic telecoms company in Russia as it was the first to set up a mobile phone operation in post-Soviet Russia and used to charge $5,000 a month-plus connection fees