The parent company of Yandex, Russia’s largest tech company and known as the country’s answer to Google, has sold off most of its Russian assets.
The deal leaves the Dutch parent company — and its thousands of highly skilled tech employees that left the country — free to build in Europe. Its plans include developing four startups, primarily focused on AI, marking a significant push into the industry at a time when competition is heating up.
A Kremlin haircut
Yandex’s Nasdaq-listed Dutch parent company has completed the sale of 72% of its Russian operation to some of the company’s former management and a consortium of investors, including Russian oil major Lukoil. The remaining 28% of the sale will go through in July.
The deal, announced in February after 18 months of negotiations, priced the company at $5.2bn, which included a mandatory valuation cut of 50%, under Russian government rules on exits for Western companies. At its peak, Yandex was worth $30bn.
Yandex was founded in the 1990s’ dotcom boom and the company’s flagship search engine went live in 1997. It then went on to expand its offering to include online games, a music streaming service, an online maps product and a ride-hailing service.
The war disrupted the company’s plan to become a global internet giant. Large numbers of its staff left the country and foreign investors distanced themselves from it.
Yandex’s cofounder, Arkady Volozh, was placed under sanctions by the European Union in June 2023. The sanctions against him were lifted in March this year. Volozh now lives in Israel.
The Kremlin viewed Yandex as a strategic and economically important business, meaning negotiations for the sale of its Russian assets involved months of political wrangling.
Dmitry Peskov, Putin’s spokesman, called the company “one of the economy’s national champions in high tech and one of the largest companies,” Russian newswire Interfax reported.
“It’s important for us that the company continues to work in the country.”
Yandex 2.0
With the Russian assets sold off, Yandex’s Dutch parent company is ramping up its European presence, having kept hold of several international assets in the deal.
It’s working on four startups:
- Nebius AI, which provides infrastructure for AI practitioners, including a GPU cloud platform. Nebius runs a data centre in Finland and counts Nvidia as a partner.
- Toloka AI, which provides data annotation services for large language models.
- Tripleten, an edtech service which trains people up to work in AI and the IT sector more broadly.
- Avride, which develops autonomous vehicles and delivery robots.
The parent company, which will soon unveil a new name, is staffed by 1,300 former employees from Yandex who have left Russia for abroad. The company had a reputation for employing highly-skilled tech talent.
"These people are now out, and in a position to start something new, continuing to drive technological innovation," Volozh said in a 2023 statement. “They will be a tremendous asset to the countries in which they land.”
Time will tell whether Yandex’s exiled tech talent can make a dent in the European AI market.
