Yandex Considers Itself a Strategic Property for Russia – and an IPO in the Future

We have already covered the Russian search engine (which happens to be more popular than even the almighty Google in Russia) Yandex on Profy, including the company’s NASDAQ IPO plans. The thing is that the company promised to go public on NASDAQ quite a number of times but at the time we criticized the idea because of the attitude towards all the Russian companies after the conflict between Russia and Georgia. The latest rumors had 2009 as the year when the IPO would become a reality for Yandex but then the company confirmed IPO delay due to the world financial crisis.

Today there’s a very interesting interview of Yandex CEO Arkady Volozh (in Russian) to one of the major Russian business newspapers detailing the company’s vision of the industry and IPO intentions as well. In the interview he could not avoid bragging about the success of the local search engine in the Russian market in 2008: Yandex market share in search further increased to 56% - which is even more impressive compared to 23% that is now owned by Google.

As for the IPO, Mr. Volozh explained that IPO is simply impossible when 70 out of 80 funds you negotiated with have no time to talk to you as they are busy with their own problems while 2 out of 3 banks that promoted the company are on the verge of bankruptcy themselves. But at the same time he confirmed that IPO was still one of the possible scenarios for the Russian company - without saying anything specific on when it would happen.

But I think this decision is not surprising at all as we don’t expect any more or less significant IPOs in the market where there is no stability at all and any company that wants to be valued at a good level will most certainly prefer to wait with IPO for until the crisis is over (or at least the situation stabilizes). But what is definitely interesting in the interview is the CEO’s vision of the entire internet industry in Russia now that we have the new president who is very fond of internet and values it as a communications tool a lot.

The idea that Mr. Volozh shares with the readership of the newspaper is that internet is a crucial infrastructure for any country now - same as roads or railways - and the state can not let one of such crucial industries develop without any supervision at all (and support as an additional benefit as well). What’s more, Yandex as the leading internet company in Russia is also a strategic property for the country which must mean that the government will not ignore all the developments around the company and will probably choose to influence the market in this or that way to protect Yandex as a strategic company.

All in all, I think it is a very interesting idea to view internet as an infrastructure that has importance similar to that of railroads (and I actually think it is not far from truth in some countries relying on internet a lot) and certain national internet companies as important enough to expect governmental support when they need it - a peculiar Russian-style lobbyism where you simply expect to be supported because your business is too important to be ignored.