Union of Sberbank and Yandex? ''The market dislikes when state companies purchase a private business''
Expert about consequences of a possible deal between the Russian search engine and Gref’s bank as well as reasons for investors’ sharp reaction who collapsed the IT giant’s shares by $2bn
One of Yandex founders Arkady Volozh announced changes in the company's ownership equity on 22 October. It should be reminded that last week Yandex cheapened by $2bn after the news about Sberbank's purchase of the Russian IT giant's shares. Realnoe Vremya studied the statement of Volozh and turned to famous Russian venture capitalist Aleksandr Rumyantsev who told about the reason of the investors' overreaction to the news about the IT company's deal with the state bank, analogous cases in the Russian market and whether Yandex benefited from this deal or not if it was real.
''I plan to be chairing Yandex further on''
The news that Sberbank's administration was conducting negotiations to buy a lot of Yandex shares was published by Vedomosti and The Bell on 18 October. ''There isn't any decision on the deal, but the bank wants to hold up to 30% in the capital <…>. It also includes the right of veto on key issues <…>. The deal doesn't have configuration, but different options are discussed – from an addition issue to purchase of shares from the market to sale of part of shares by majority shareholders,'' The Bell said with a link to two sources familiar with the bank's management and the gist of the offer.
Although Sberbank's press service quickly notified: ''The bank didn't get offers to purchase Yandex's shares and didn't turn to Yandex with such an offer,'' the publication of the news about the possible deal instantaneously collapsed the IT company's shares. As RBK said, the value of shares that began grow in price in Moscow Exchange reduced from 2 356,5 to 2 185 (minus 7,28% of the day's high) and from $35,9 to $33 in NASDAQ (minus 8%). The company's total losses due to the news about the talks with Sberbank exceeded $2bn for two days – it's the reduction of the company's capitalisation.
On 22 October, Yandex's press service, which first briefly replied 'the company doesn't comment on rumours'' to media requests, published a press release with a statement of one of the founders of the IT giant Arkady Volozh. It should be noted quite circuitous formulations are used in the text, and there is no mention of Sberbank the news about the deal with whom, in fact, made the company to publish the statement.
''Assumptions about possible changes in the ownership equity of Yandex appeared in the press. In this respect, the team of Yandex claims it constantly receives different offers from third parties. But according to the company's policy, it doesn't comment on rumours,'' the press release says. ''The Board of Directors and its related committees constantly consider issues on the company's capital structure within a usual work process. <…> It's important to notice any corporate actions affecting rights of any shareholders, without depending on which shares they hold, can be taken only in strict compliance with all formal corporate management procedures. Particularly not only the council of directors but also all shareholders holding 75% of A class shares must approve such actions.''
The text prepared by the company's press service also includes the next statement of Arady Volozh: ''I plan to be chairing Yandex further on, and I'm not going to sell my share in the company. I also support efforts of the company's council of directors on development, including on evaluation of different opportunities to manage the capital's structure.''
After publication of the press release, Yandex's shares became almost 8% expensive in Moscow Exchange, the IT's company's shares grew in price by more than 7,5% before the major auction began. But the joy didn't last for long: several hours later the shares of Yandex fell again because the bill on restriction of foreigners' share in news aggregators was introduced to the State Duma (according to United Russia and LDPR's initiative, foreigners can't hold more than 20% in news aggregators).
''When VTB bought Magnit, the reaction was similar''
Realnoe Vremya asked famous Russian venture capitalist Aleksandr Rumyantsev to comment on the situation with Yandex. He particularly explained why investors of the IT companies saw a threat to their investments:
''In my opinion, the threat is that a state company can take part in a private company's work. Investors suppose the formation of this kind of bond is a risk for assets. For this reason, many investors began to close their positions to fix their income. After they began to close their long positions, the fall took place – it's quite logical and natural,'' the expert said.
In our newspaper's interlocutor's opinion, such a reaction isn't unprecedented. As an example, Aleksandr Rumyantsev told about a recent deal between the state bank and a retailer. It should be reminded that this year VTB has been the biggest shareholder of Magnit having purchased the biggest part of shares from retailer Sergey Galitsky.
''If I am not mistaken, when VTB bought Magnit, the reaction was similar. The market dislikes when big state companies purchase a private business, consequently, its reaction isn't very good. When individual entrepreneurs manage a company, it grows and develops better than in the case when big bureaucratic corporations go there. The case if that internal mechanism become not so effective,'' Aleksandr Rumyantsev comments.
In answer to Realnoe Vremya's questions if the deal with the state bank would be beneficial for the IT giant if it were real, the expert gave a clear message: ''It seems to me the scheme existing initially is more sustainable than the one that could appear after the entrance of state players.''
It was also presupposed on a wave of messages about the possible deal between the state bank and the IT company that the situation with Sberbank and Yandex is one of the elements of a big picture called ''construction of controlled venture economy in Russia''. However, the expert considered ''it was a bombastic statement''.
''To start with, I need to say, in my opinion, the venture market doesn't exist in Russia. Over 200 deals were made last year. It's too little in comparison with the US market, which had about 30,000 deals. Even Belarus has more deals than Russia. This is why the steps the state takes are expected, and I hope very much this situation will change in the short run, including thanks to the state's actions. In other words, it's a normal politics, as many countries are turning towards creation of optimal conditions for venture financing,'' the expert concludes.