HeadHunter announced plans to redomicile to Russia

HeadHunter presented investors with proposals for the exchange and repurchase of its securities at a discount with the expectation of transferring the company from Cypriot to Russian jurisdiction. The company cited both restrictions that apply to holders of securities from unfriendly countries and tightening regulation of classifieds services in Russia. The proposal, according to analysts, will help maintain a fair price for the securities for other shareholders.

The online recruiting platform HeadHunter announced to investors plans to carry out redomiciliation in the Russian Federation, as follows from documents available to Kommersant. The company invited investors to agree to exchange receipts of HeadHunter Group PLC registered in Cyprus for shares of an international joint-stock company “registered in accordance with Russian legislation” (ICPAO). To begin the redomiciliation process, it must be approved by at least 75% of the shareholders.

There is no data in the Unified State Register of Legal Entities about the new ICPAO. According to information from the website, which collects applications from investors, we are talking about an international joint-stock company registered in Kaliningrad, owned by “certain top managers of the company.” HeadHunter refused to disclose their names.

Considering the high proportion of shares that were previously freely traded on a Western exchange, as well as the current regulatory difficulties, the “standard” redomiciliation process is not applicable to HeadHunter Group PLC, the company told Kommersant. In this regard, a reorganization plan was structured, taking into account the interests of different groups of shareholders. “It includes an offer to exchange shares and depositary receipts for shares of MKPAO, aimed at shareholders who want to maintain their ownership, as well as a buyout offer, aimed primarily at foreign investors who want to sell their stake,” explained a company representative. The buyout option involves payments after deducting the “exit tax” from the Russian Federation of 819.45 rubles. for a security. According to the results of trading on October 31 on the Moscow Exchange, HeadHunter shares cost 3,745 rubles. for paper.

Recently, foreign holders of HeadHunter Group PLC securities found themselves virtually deprived of the opportunity to operate this asset.

Until last year, depositary receipts (ADS) for the company’s shares were traded on the American NASDAQ. The message to investors clarifies that NASDAQ suspended trading in HeadHunter ADS in February 2022, and on July 8, 2023, its securities were delisted from this site. They continued to trade on the Moscow Exchange and St. Petersburg Exchange, but participation in these trades is difficult for non-Russian investors. Payment of dividends to holders from unfriendly countries is carried out in special accounts. If the redomiciliation plan is approved, new shares of MKPAO are planned to be listed on the Moscow Exchange.

HeadHunter also explains the need for redomiciliation by new requirements for classified companies in Russia: from March 1, 2023, at least 50% of the voting shares of such companies must belong to citizens or companies of the Russian Federation. In anticipation of the adoption of relevant amendments to the Law “On Information”, the Dutch Prosus sold KCG ad service Avito.

As analysts explained to Kommersant, the company’s actions are aimed at reducing the share of foreign participation.

“Due to objective reasons, HeadHunter cannot be recognized as a strategic asset. However, the presence of non-resident minority shareholders in the issuer’s capital is extremely undesirable, since the latter can make claims in accordance with the law “On Joint-Stock Companies”, and if the claims are not satisfied, slow down the process of unfreezing Russian assets abroad,” notes Anna Avakimyan, chief analyst at RegBlock.

“The change of jurisdiction should make it easier to pay dividends, and a discounted buyback is positive for a fair price per share for the remaining shareholders,” says BCS World of Investments analyst Maria Sukhanova. The risks for shareholders, she said, “will depend on the details of the redomiciliation scheme.”

HeadHunter clarified that they assess the likelihood of redomiciliation approval “as extremely high,” but “if the number of votes required to approve the current plan is not received, the company will consider additional options and opportunities for redomiciliation.”

Yuri Litvinenko, Timofey Kornev, Tatyana Isakova, Yulia Tishina