Can VTB’s entry into the capital of Yandex affect the company’s activities

Bank VTB is discussing the purchase of a stake in Yandex as part of a consortium of investors, Andrey Kostin, head of the bank, told reporters as part of a Russian-Chinese business forum.

“Regarding Yandex: we are members of a large consortium, yes,” Kostin told reporters, noting that the share VTB “will still be discussed” (quote from Interfax).

Kostin did not name the amount of the potential transaction and its terms, while answering a clarifying question whether the issue of buying a stake in Yandex could be resolved before the end of the year, he answered: “I think that of course.”

“VTB is interested in buying a stake in the Russian Yandex as part of a consortium, has submitted a corresponding application, but the final decision on the bank’s entry into the deal will be made following negotiations on the share, amount and other conditions,” a representative of the bank’s press service said.

The representative of “Yandex” declined to comment.

Last week, Bloomberg reported that Yandex’s board of directors had received an offer to buy at least 51% of the company’s Russian business. According to the agency, the Russian part of “Yandex” was estimated at about 560-600 billion rubles. Thus, a consortium of investors can close the deal for 280-300 billion rubles, then analysts interviewed by Vedomosti noted.

Bloomberg named the head of Interros Vladimir Potanin and the co-owner of Lukoil Vagit Alekperov as potential buyers of a stake in the Russian company. Also, The Bell (recognized as a foreign agent in the Russian Federation) reported on the participation in the negotiations of the bank VTB and entrepreneur Alexei Mordashov. According to the publication, the entry of new investors into “Yandex” coordinated by the President of the Russian Federation Vladimir Putin.

The candidates were coordinated with the president by the adviser on corporate development of “Yandex” Alexey Kudrin.

Since we are talking about a consortium of large investors without any blocking rights of one of its participants, and not about buying a stake in Yandex, only VTBa strong influence of the bank in the company’s activities is not expected, says the head of the information and analytical content department “BCS The world of investments” Vasily Karpunin. “So the impact on both VTB shares and Yandex shares is rather neutral at the moment,” he notes.

“We do not expect any significant changes in Yandex’s strategy or its operations,” Artem Mikhaylin, a leading analyst at VELES Capital, agrees with Karpunin.

“At VTB [для принятия такого решения] the reasons may be different. Perhaps this is just an investment interest. Many market participants will not refuse to get a share in Yandex at a good discount,” he continued, emphasizing that we are talking about acquiring, first of all, an economic share. According to the expert, this deal is of high state and social importance. “Probably, it is important for the state who will be the company’s shareholders in the end,” Mikhailin said.

Now the main shareholder of the company is still LASTAR Trust, a family trust of the founder of Yandex, Arkady Volozh. It controls 45.1% of the voting shares and 8.5% of the share capital. 46.5% of voting shares and 87.9% of share capital are in free float.

As Bloomberg noted, over the past year, Yandex has been under pressure both from foreign counterparties and in Russia, since its main legal entity is Yandex NV in the Netherlands.

November 2022Yandexannounced plans to split the company. A number of businesses, including autonomous cars, cloud technologies, and others, will continue to operate in Russia, but their international parts will be separated into independent companies under the control of a company in the Netherlands, the company said at the time.

The main part of Yandex NV’s business, taking into account a number of foreign directions, can be separated into a separate group of companies that will retain the Yandex brand, the company said in a statement. “Dutch Yandex NV plans to eventually withdraw from the shareholders of this group of companies and change its name,” the press service of Yandex reported in November. Such a scheme was implied by the decision of the board of directors “on preliminary intentions.” The company also studied then the possibility of changing the corporate structure, in which it was planned to transfer the management of the selected group of companies to the management of Yandex, it was then noted in the statement. The timing of the implementation of this plan was not called at that time.