(Bloomberg) -- Roman Abramovich is taking a stake in Russia’s largest internet company, Yandex NV, giving it more firepower to buy out ecommerce partner Sberbank PJSC and accelerate a push into online retail.
The billionaire owner of Chelsea Football Club and two partners -- VTB Bank PJSC and a company owned by steel billionaires Alexander Abramov and Alexander Frolov -- bought into Yandex as part of a $1 billion share sale to fund growth and strategic projects. In total, Yandex sold 20.3 million new shares at $49.25 apiece, including $400 million on the market and $600 million in a private placement to investors, including Abramovich.
The sale on the market was double the planned size of $200 million, Yandex said in astatement Thursday, citing results of the offering managed by Goldman Sachs Group Inc. Yandex closed at a record high of $50.3 a share last night.
Yandex also announced it will spend $570 million to end the ecommerce and online payments venture with Sberbank, Russia’s largest lender. The move signals a change of tack by Yandex founder Arkady Volozh, who until now used joint ventures to share the burden of heavy startup investments in ecommerce and ride-hailing and may now feel confident enough to go it alone.
Yandex would be interested in buying out Uber Technologies Inc. from their Russian ride-hailing venture “at a reasonable price,” Chief Financial Officer Greg Abovsky said Wednesday on an investor call, confirming a Bloomberg News report earlier this month. “We are in constant dialog with Uber representatives,” he said. “There is no deal on the table.”
Yandex is also looking to restructure the partnership with Uber, possibly combining the venture’s taxi business with Yandex’s car-sharing activities, Abovsky said. The taxi unit’s self-driving vehicle division could be also spun off, with both Yandex and Uber retaining ownership, he said.
Kirill Panarin, a Moscow-based analyst at Renaissance Capital, said Yandex had over $2.5 billion in cash on its balance sheet as of March 31, which would have been enough to buy out Sberbank without the need for fresh funds.
“Raising funds from the market means Yandex may have more deals to follow, like buying out Uber from their ride-hailing and foodtech JV,” Panarin said by phone.
The Sberbank venture hasn’t been an easy one for Volozh, who’s had a tense relationship with the bank’s Chief Executive Officer Herman Gref. Last year, Gref announced a partnership with Yandex’s rival Mail.ru Group Ltd. to develop ride hailing and food delivery.
Read More: Yandex, Sberbank Look at Splitting E-Commerce, Fintech Projects
“Given the great potential for further growth of e-commerce in Russia, we believe now is the right time for us to fully consolidate operating control over Yandex.Market and accelerate our e-commerce strategy,” Yandex Chief Financial Officer Greg Abovsky said in the statement on the Sberbank buyout.
Under the two-pronged deal, Yandex will buy Sberbank’s 45% stake in ecommerce company Yandex.Market for 42 billion rubles ($610 million) and sell to Sberbank its remaining 25% holding in online-payments business Yandex.Money for 2.4 billion rubles.
Sberbank had invested 30 billion rubles in Yandex.Market in 2018, giving Yandex more resources to transform its price-comparison site into an online marketplace. The partners launched ecommerce platform Beru which entered the top-12 of Russian online retailers last year, according to researcher Data Insight, and reached monthly sales of 4 billion rubles.
The share placement is well timed as Yandex shares reached a record high this week, taking its market value above $16 billion, after President Vladimir Putin agreed to give unprecedented tax breaks to information technology companies, BCS Global Markets said in a note.
Bringing in Abramovich and the two co-founders of steelmaker Evraz Plc “could raise some eyebrows,” said BCS, but a two-year lockup for them to sell shares and a clause that forbids any of the three investors from acquiring more than 3.99% of the stock “may provide some comfort.”
The new funds boost Yandex’s finances just as it grapples with the coronavirus pandemic, which contributed to a 41% fall in its earnings before interest, taxes, depreciation and amortization in the second-quarter.
(Adds offering price, updates volume from second paragraph)
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