Page 74 - Russia OUTLOOK 2024

oligarchs Boris Berezovsky and Vladimir Gusinsky owned two of the biggest TV stations and used them as weapons in the so-called “Banker’s war”.
The highly respected Kudrin is supposed to be the honest broker who can put the deal together, but things were complicated after Yandex’s founder Volozh slammed Putin’s war in Ukraine as "barbaric" from his new home in Israel – only the second senior Russian businessman to have publicly condemned the war.
The first businessman to openly criticise the war was another tech tycoon, Oleg Tinkov, who owned Russia’s only purely online bank Tinkoff Bank, which he was forced to sell to oligarch Vladimir Potanin for “kopecks on the ruble”, and then fled the country. Potanin, the owner of mining giant NorNickel and one of the richest men in Russia, is also one of the oligarchs that is bidding for Yandex.
In a parallel story Russia’s leading social media platform VK has taken advantage of the crisis to snap up assets and expand its business in 2022, but at a cost. Faced with some big M&A bills and poorly performing acquisitions, the company has taken a significant financial hit to its balance sheet.
But this is not a problem, as its agenda is political, not commercial. VK was taken over in December 2021 by state-run insurer Sogaz, founded by gas giant Gazprom, and is part-owned by banker Yuri Kovalchuk, whom Putin has publicly called a personal friend. The company is now set to become Russia’s tech leader.
VK was founded in 1998 as an e-mail service and went on to become a major corporate figure in the Russian-speaking segment of the internet. VK operates an e-mail service, internet portal Mail.ru, and Russian social networking services VK, Odnoklassniki (the “Facebook of Russia”) and Moi Mir. Additionally, VK manages various e-commerce, transport and communication platforms and in the last two years has been expanding its empire rapidly, with the Kremlin’s approval.
The take-over of Yandex and the Kremlin’s control of VK is typical of Putin’s hybrid strategy of on the one hand setting up two competing but powerful state-controlled companies in a strategic sector, and on the other hand allowing a slew of privately owned companies to provide the necessary competition to make them efficient. The Kremlin then leaves its two titans to compete according to market principles but has retained the ability to interfere when deemed necessary in times of crisis or war.
This process has not come to an end, as the takeover of Yandex is not complete, but a deal should be done sometime in 2024. The effect on the rest of the sector will be limited and other leading tech companies like fast growing e-commerce market leaders Wildberries and Ozon should be left to operate as they like.
But the development of Russia’s tech sector has been severely stunted by the shake-up of the sector’s ownership. In the run-up to the war there were 15 IPO of Russian companies on the international capital markets, all raising over
74 Russia OUTLOOK 2024 www.intellinews.com