THE BELL WEEKLY: Yandex for sale

Petr Mironenko
Petr Mironenko

Hello! This week our top story is about Russian billionaires competing to buy a controlling stake in Yandex, Russia's homegrown version of Google. We also look at an assassination attempt on pro-war writer and politician Zakhar Prilepin and the latest spat between the Wagener mercenary group and Russia’s Defense Ministry.

Billionaires compete to buy the ‘Russian Google’

Yandex, one of Russia’s biggest IT companies and a local equivalent of Google, is about to decide on its new owners. The corporation is currently going through a “divorce” from its founder, Arkady Volozh, who is retaining part of the company’s businesses to develop them abroad. As The Bell and Meduza reported, the leading candidates to take over Yandex’s assets are Russian billionaires: co-founder of oil giant Lukoil Vagit Alekperov, owner of steel and mining company Severstal Alexei Mordashov, and Norilsk Nickel owner Vladimir Potanin.

A discount for oligarchs

A few months ago, Yandex invited several leading Russian businessmen to consider  controlling stake in the company. Potential buyers had to make their bids alongside an assessment of the company’s future, one source explained.

A controlling stake in Yandex could be sold at a substantial discount. At its peak, the company was worth $30 billion. After the war broke out, that fell to $17 billion. And following the adoption of new legislation about discounts and taxes for foreign business owners (the shares are being sold by a Dutch company, Yandex N.V., controlled by a trust owned by Volozh’s family) the final price could be as little as $7.6 billion. If the deal goes ahead on these terms, it will be a great bargain, one source suggested.

Buyers may be announced within the next two weeks. Sources told The Bell and Meduza that about a dozen people submitted bids. Alekperov, Mordashov and Potanin made the short list. Two sources also named Leonid Mikhelson, owner of gas company Novatek.

One intriguing question is the possible involvement of Roman Abramovich, former owner of Chelsea football club, or his partners. Two sources said that the billionaire had abandoned his plans, while a third insisted that Abramovich, along with his partners and VTB bank (which became joint minority shareholders in Yandex in 2020) are still interested. “Abramovich wanted to buy Yandex outright, including the international business,” one of the billionaire’s acquaintances claimed. Abramovich’s representatives say that his businesses are not involved in any talks to purchase a stake in Yandex.

The Kremlin’s role

The man responsible for securing new investors is Alexei Kudrin, former head of Russia’s Audit Chamber and now corporate development advisor at Yandex. The process has dragged on for several months because Kudrin is looking to reach separate agreements with several candidates over the price and details of the deal, according to one source close to the talks. “That’s not how consortiums are put together,” he said.

The selection process is being curated by the Kremlin. One source claimed that Novatek founder Mikhelson was encouraged to get involved by the Kremlin, even though he was not particularly interested. Not long ago, despite restrictions on business deals with foreign companies, the Russian authorities allowed Novatek to spend almost $1.2 billion on buying out Shell’s stake in the Sakhalin-2 LPG project.

Yandex is keen to ensure that the company has as many new shareholders as possible, each with small blocks of shares. It also wants to have as much distance as possible between investors and the state — to reduce sanctions risks. Vladimir Lisin, owner of the NLMK steel company, and Vladimir Yevtushenko of investment company Sistema, were also invited to make a bid, but they declined to take part, two sources said.

Yury Kovalchuk, a media mogul and close friend of Vladimir Putin, also reportedly showed interest. However, both the company’s management and the current investors of Yandex N.V. were opposed to his involvement.

Sharing the spoils

The share that could be sold to investors in an unstructured Yandex is still up for debate. One possible “divorce settlement” would give the new shareholders 51% of the Russian Yandex, while 49% would stay with Dutch Yandex N.V. Two sources said that retaining the Dutch company as a co-owner is preferred because it mitigates some of the sanctions risks from new investors while also mollifying the American foundations that are minority shareholders via the Dutch company. Ultimately, though, Yandex N.V. will have to completely withdraw from the Russian business.

The Yandex N.V. board is reviewing the terms of the deal. After this, they will be presented to the company’s shareholders. If the shareholders vote in favor, the Dutch company will create a new subsidiary in Russia, which will receive all of Russian Yandex’s business projects, as well as a number of the company’s foreign projects. Then, Yandex N.V. will sell a controlling stake in this company to a consortium of Russian investors in return for money and licenses to Yandex projects that will be developed abroad, including self-driving vehicles and cloud technologies. The “divorce” could be concluded in the fall.

Why the world should care

The major redistribution of assets in Russia that began with the outbreak of war continues. This is somewhat reminiscent of the privatization of Soviet enterprises after the collapse of the U.S.S.R., when major financial institutions took control of state enterprises which then turned into billion-dollar businesses. Asset prices were undervalued, and sales were politically motivated.

Today’s Russian oligarchs have another opportunity to acquire businesses at knockdown prices. Before the Yandex sale, Potanin bought Tinkoff Bank, one of Russia’s leading banks, for just 3% of its market value after its colorful founder Oleg Tinkov began to speak out against the war. It is unclear whether the Yandex sale will be the last of these, but no one can rule out the possibility that there will be others.

One more pro-war Russian propagandist is targeted in a car bomb attack

This weekend saw another attempted assassination of a prominent supporter of Russia’s war. Writer and politician Zakhar Prilepin survived a car bomb but was seriously injured. His driver was killed at the scene. This is the third assassination attempt in the past nine months. Earlier, the daughter of pro-Kremlin philosopher Alexander Dugin and self-styled war correspondent Vladlen Tatarsky were killed in separate attacks.

  • Prilepin’s car was blown up Saturday. Anti-tank mines were placed under the car and detonated remotely. The suspect behind the attack is Alexander Permyakov, 29, from Ukraine’s Donetsk Region. During police interrogation, he said that he was recruited by Ukrainian security services in 2018. The Russian authorities described the explosion as a terrorist attack. The Atesh movement, created by Ukrainians and Crimean Tatars, claimed responsibility for the attack.
  • Prilepin’s driver was Alexander Shubin, 27, who previously fought with separatists in the Donbas. Belarusian media reports that he was also among the Wagner Group soldiers detained in that county in 2020. At that time, security officers in Belarus thwarted a Ukrainian plan to arrest several dozen Wagner mercenaries by luring them onto a flight to Istanbul that would then land in Ukraine. Belarus promptly released the Wagner troops, who returned to Russia.
  • Zakhar Prilepin is probably a more renowned and influential figure than Dugina or Tatarsky. He began his career as a cop and in the late 1990s he fought in Chechnya. Later, he turned to journalism in Nizhny Novgorod and took an interest in writing. By the summer of 2011, he had published nine novels. That year, he won the prestigious National Best Writing award and was chosen as writer of the year by GQ magazine. At the time, Newsweek described him as “Russia’s best young novelist.”
  • After the war broke out in Ukraine in 2014, Prilepin initially went there as a journalist, then as a volunteer soldier. Later he commanded a separatist combat unit. Investigators from Bellingcat wrote that his role was more symbolic rather than that of a genuine commander, although he sometimes fought on the front lines. “Whatever  they say, I ran a combat unit that killed large numbers of people,” Prilepin has said.
  • In 2018, Prilepin left his battalion and went into politics. First, he joined Putin’s “All-Russian People’s Front,” then founded his own “For Truth” organization. Later, he created a political party under the same name and became its chairman. In 2021 “For Truth” merged with two other parties and won seats in the State Duma. Prilepin could have served as a deputy but declined the opportunity.
  • After Russia launched its full-scale invasion of Ukraine, Prilepin became one of its most vocal supporters. In early 2023 he was due to go to the front as a volunteer — but nothing is known about his actual involvement in the war.

Why the world should care

No one can say for certain whether the attack on Prilepin will be the last attempt on the life of a prominent supporter of Russia’s war in Ukraine. This is already the second assassination attempt this year. What is clear is that pro-Ukrainian forces (possibly even Ukraine's security services) have the resources and capabilities to organize attacks deep inside Russia.

The conflict between Wagner and the Defense Ministry heats up

Over the last year, mercenary group Wagner and Russia’s Defense Ministry have regularly clashed. Last week, this spat reached new heights when Wagner founder Yevgeny Prigozhin released several clips in which he aggressively accused the Russian defense minister and his chief of staff of failing to provide shells for his mercenaries. Prigozhin threatened to abandon the city of Bakhmut, where there has been heavy fighting in recent months.

  • In the first video, Prigozhin stood against a backdrop of dead Wagner troops. He accused Shoigu and Gerasimov of causing their deaths because Wagner forces suffered a chronic shortage of ammunition. “We lack 70% of the ammo we need. Shoigu, Gerasimov, where’s the fucking ammo?” Prigozhin yells in the video. “You sit on your asses in expensive clubs while your children hide from life and shoot YouTube videos,” he continued. Prigozhin is likely referring to Shoigu’s son-in-law, blogger Alexei Stolyarov, who mostly lives abroad.
  • In his next clip, Prigozhin said that he would leave Bakhmut after May 9 due to “shell hunger” since his units are “doomed to a senseless death.” This time, he also addressed President Vladimir Putin. Russian propagandists ignored the ultimatum and focused on the Wagner Group handing over positions in Bakhmut to the regular army while it “licks its wounds” in the rear.
  • In his third clip, Prigozhin described how Colonel General Mikhail Mizintsev was pragmatic in his allocation of ammo to Wagner forces and the regular army alike (now Mizintsev has been appointed deputy commander of the Wagner Group, according to reports). In the same video, Prigozhin said that since the start of the war, the private military group has lost “tens of thousands of people.”
  • Shortly after the videos emerged, Chechen leader Ramzan Kadyrov said that he was ready to send his own forces to Bakhmut in place of Wagner. Kadyrov also recalled how the Defense Ministry did not immediately help his troops when they were fighting in Ukraine and criticized Prigozhin for airing his dirty laundry in public.
  • Then Kadyrov released his own clip, contesting Wagner’s claims that it liberated the Luhansk region town of Popasnaya. Kadyrov ordered the Wagner Group boss to “hold the line” until Chechen fighters replaced his mercenaries. “You always told me you live like a man, so I’m telling you that you must do this. Our people will contact you and explain it to you,” Kadyrov said.
  • On Sunday, Prigozhin announced that the Defense Ministry had promised to give him the necessary ammunition to continue fighting in Bakhmut.

Why the world should care

Previously, the Russian authorities described it as an independent group. Now, though, it is clear that the Defense Ministry exercises some control over its activities. Prigozhin said that his forces had received a “combat order, our first in all this time.”


Support The Bell!

The Bell's Newsletter

An inside look at the Russian economy and politics. Exclusively in your inbox every week.