Business

Yandex seeks Putin approval for restructuring plan

Yandex, often described as “Russia’s Google,” is seeking Vladimir Putin’s blessing to sell its operations in the country, spin off its major international projects and appoint a longtime close friend of the Russian president to manage its relationship with the Kremlin.

Three people familiar with the moves said the internet giant had unofficially recruited chief economist Alexei Kudrin to win the Russian president’s approval, in principle, for the restructuring plan.

The changes will cause the Dutch holding company Yandex to exit the Russian market by selling its entire business except for the international divisions of four main units.

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The plan is to spare parts of Russia’s biggest tech success story the disastrous consequences of Putin’s war in Ukraine, which sent several thousand Yandex employees fleeing the country.

The restructuring appears to be an admission that Yandex’s ambitions to become a global internet giant are over, with Western investors and major partners distancing themselves from the post-invasion Russian conglomerate.

When the Nasdaq in New York suspended trading in its shares in February, Yandex’s market capitalization fell to $6.8 billion, down from more than $30 billion just a year earlier.

If Putin gives his final approval at their Thursday meeting, Kudrin is expected to leave his current position at the head of the Audit Chamber, a government accountability body, for a leadership position at Yandex, the people said.

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Although Kudrin’s future position remains undetermined, his role will actually be to serve as a krysha, or “roof” at Yandex — a term for high-level political protection, two of the people said.

“Kudrin is one of those people who can be a superhero kresha – in a good sense,” said one person. The President had personally trusted him for many years. . . And its values ​​u200bu200bare similar to Yandex.

Yandex hopes the restructuring plan will salvage four of the company’s most promising new international ventures — in self-driving cars, cloud computing, education technology and data profiling — by ending their ties to the toxic Russian market, according to several people close to the company.

The start-up but small companies previously relied on partnerships with major US tech companies as well as servers, chips and processors that Western sanctions imposed on producers from shipping to Russia.

Yandex also hopes Kudrin will secure a future for its much larger Russian business at a time when the Kremlin is dramatically increasing state control over the economy and the internet amid an exodus of foreign companies.

Kudrin, 62, a longtime former finance minister, will become the oldest Russian official to leave office since Putin ordered the invasion of Ukraine in late February.

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Yandex.Eats food delivery couriers in Moscow. The group’s international projects including self-driving cars and cloud computing have been hit hard by Western sanctions © Natalia Kolesnikova / AFP via Getty Images

Kudrin and Putin have worked together since their days in the mayoral administration of St Petersburg, where the future Russian president cut his political teeth in the early 1990s.

“There are very few people who care about keeping them [Yandex] one person said.

Like many of Russia’s top economic officials, Kudrin is privately opposed to the war, according to two people close to him, but he has not spoken out against it or criticized Putin. Kudrin did not immediately respond to a request for comment.

Meanwhile, Arkady Voloz, the company’s founder who lives in Israel, is terrified of the war and has not returned to Russia since it began, according to friends. Yandex has not made any public pronouncements about the invasion, leaving it vulnerable to accusations of complicity by promoting the Kremlin line.

In June, Voloz resigned as CEO and transferred voting rights from his controlling stake to the board after the European Union sanctioned him for what it said was Yandex’s role in “promoting state media and rhetoric in search results, and pitching and removing content critical of the Kremlin.”

Tigran Khodaverdyan, the first deputy of Volozh, wrote on Facebook in March that the “situation is unbearable” and “the war is brutal” but said Yandex would not “climb on an armored car” in order to protect its employees and businesses.

This stance failed to impress many Yandex employees themselves, many of whom resigned in protest, or the European Union, which sanctioned Khodaverdyan shortly thereafter, citing his attendance at a round table with Putin on the day of the invasion. Khodaverdyan resigned and appealed the sanctions.

Several thousand Yandex employees left the country during the war — either to work on dismantling international projects, to flee the Kremlin’s sweeping crackdown on dissent, or to escape forced conscription into the Russian army.

Yandex sold its news aggregator, blogging platform and homepage to state-controlled social media company VK in August after it faced criticism over the media assets’ role in the war.

People said Kudrin made the deal with Putin and his top domestic policy aide, Sergei Kiriyenko. Kiriyenko is also responsible for Russia’s faltering efforts to annex four Ukrainian provinces, and his son is the CEO of VK.

Yandex has already given the Kremlin veto power over key governance issues in the 2019 deal under Kiriyenko, though the official never exercised his so-called “red button.”

But people close to Voloz say Russia’s Yandex needs the new deal to ensure it stays in private hands.

Under the restructuring agreement, Kudrin and Yandex discussed the issue of the administrator taking a small stake and taking on an unspecified role in managing Yandex corporate governance.

The people said that Russia’s Yandex management would retain control of the company’s day-to-day operations, but would delegate the company’s increasingly sensitive relations with the Kremlin to Kudrin. The transaction requires the approval of Yandex shareholders.

Although the discussions are still at an early stage, several Russian oligarchs friendly to the Kremlin have expressed interest in a stake in Yandex, according to people familiar with the matter.

Among them is metals tycoon Vladimir Potanin, who bought the Russian branch of Societe Generale and leading digital bank Tinkoff for fake prices in the spring, the people said. They added that any potential sale would be held by sanctions against potential buyers.

Yandex, the Kremlin, the Audit Court and Potanin did not immediately respond to requests for comment.

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