October 27, 2020

DealBook: Yandex Is Set for $1.3 Billion Stock Offering

The Moscow headquarters of Yandex, which is set to go public on Tuesday.Sergei Karpukhin/ReutersThe Moscow headquarters of Yandex, which is set to go public.

Less than one week after LinkedIn’s blockbuster debut, Wall Street is gearing up for the initial public offering of yet another multibillion-dollar Internet start-up.

Yandex, one of Russia’s largest Web companies, will price its offering at $25 a share, well above expectations, according to a person briefed on the deal who was not permitted to discuss the offering. The Moscow-based company, which is set to go public on Tuesday morning, will sell 52.2 million shares in its initial public offering and raise $1.3 billion. Its group of underwriters, led by Morgan Stanley, Goldman Sachs and Deutsche Bank Securities, also has the option to sell an additional 5.2 million shares to cover over-allotments.

At $25 a share, the company is being valued at $8 billion.

Enthusiasm has been building for Yandex, the most popular search engine in Russia. Two weeks ago, Yandex forecast a more modest price range of $20 to $22 a share.

For investors, Yandex represents a bet on Russia’s burgeoning technology market. Last year, it generated about 64 percent of all search traffic in the country, trumping the Internet giant Google in the region. And unlike some of its peers, the business is churning out consistent profits, according to its recent regulatory filings. Last year, it recorded revenue of $439.7 million and net income of $134.3 million.

“Yandex should generate investor interest as the only U.S.-traded company with pure exposure to Russia’s large and underpenetrated online advertising market, which is expected to grow from $840 million in 2010 to $2.3 billion by 2013,” Stephanie Chang, an analyst with I.P.O. advisory firm, Renaissance Capital, wrote in a research note on Monday.

The company, which will trade on the Nasdaq Stock Market under the ticker symbol “YNDX,” is also expected to ride a rising wave of investor enthusiasm for popular technology start-ups. In the last few weeks, a string of Internet I.P.O.s have roared out of the gates, amid surging demand for Internet companies. Last Wednesday, for instance, LinkedIn, a social network for professionals defied expectations, more than doubling on its first day of trading. Earlier this month, Renren, one of China’s leading social networks, rose 29 percent on its debut and raised $743 million in its offering. Both stocks have since pulled back — LinkedIn and Renren fell about 5 percent on Monday — but LinkedIn remains 96 percent above its offering price.

“There will be huge demand for Yandex; there has been since day one,” said Scott Sweet, a senior managing partner of I.P.O. Boutique.

He added, “Yandex didn’t need the help, but they should send LinkedIn a ‘thank you’ card.”

Yandex is another important test for the market.

By the sheer size of its initial public offering, it is the largest Internet issue to hit the American stock market since Google’s $1.7 billion offering in 2004. Still, it is not the only major technology I.P.O on deck this week. On Thursday, Freescale Semiconductor, is expected to go public with an offering that could raise about $1 billion.

For Yandex, it has been a long road to the public markets. The company originally filed to go public in 2008, but the company postponed it plans amid turmoil in the financial markets. Yandex’s largest shareholders include the hedge fund Tiger Global Management, Baring Vostok Private Equity Funds and the company’s chief executive, Arkady Volozh, all of which are selling some shares in the offering.

Article source: http://feeds.nytimes.com/click.phdo?i=607ed2021d02c8914ed1fe6bbf27da46

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