Yandex NV (YNDX) founders Arkady Volozh and Ilya Segalovich and shareholders including Baring Vostok Capital Partners plan to sell as much as $607 million worth of stock as the growth of Russia’s largest Web-search engine slows.
They are offering investors 24.3 million shares, including 18.2 million from Baring Vostok and 5.1 million from Chief Executive Officer Volozh, according to a regulatory filing. Chief Technology Officer Segalovich is selling 0.2 million shares. Combined, the shares represent 7.4 percent of the company.
Slowing revenue growth and stiffer competition have left Yandex’s shares little changed since its initial public offering two years ago. Global leader Google Inc. (GOOG) has captured about 26 percent of the Russian market, cutting incumbent Yandex’s lead to 61 percent, according to Liveinternet.ru.
“Founders and early investors are selling out from Yandex to recoup their investments,” Konstantin Belov, an analyst at UralSib Capital in Moscow, said by phone today.
Yandex fell as much as 7.6 percent in New York, the biggest intraday decline since Feb. 19, in anticipation of the secondary offering, and was down 6.2 percent at 10:18 a.m. at $23.49.
The stock has added 8.8 percent this year and reached the price of the May 2011 IPO of $25 a share again yesterday, valuing the company at $8.4 billion. Google has gained 59 percent since the Yandex IPO and has a market value of $274 billion.
Volozh and his classmate Segalovich, both programmers, founded the yandex.ru search engine in 1997. Volozh was valued at $1.15 billion by Forbes magazine this year.
Yandex said last month its revenue growth may slow to between 28 percent and 32 percent this year from 44 percent last year as the Russian Internet market has matured and the growth of text-based advertising has slowed.
The price for the offering is expected to be determined today after the market close in New York, according to marketing documents obtained by Bloomberg News. It’s worth as much as $607 million based on yesterday’s closing price.
The sale is being managed by Morgan Stanley, Deutsche Bank AG and Goldman Sachs Group Inc., Yandex said in a statement. The banks will have an option to buy an additional 2.43 million shares, or 10 percent of the offer size, Yandex said.
Private-equity funds Baring Vostok and Tiger Global Management LLC were the largest investors in Yandex before its $1.3 billion IPO in 2011, and have been selling shares in the market since then, said Alexander Vengranovich, analyst at Otkritie Capital in Moscow. Baring is selling as the lockup period after its previous sale in September expired last week, he said.
Baring Vostok, which started investing in Yandex in 2000, had a 16 percent stake as of Dec. 31, while Volozh owned 12.2 percent, Tiger Global 4.7 percent and Segalovich 2.6 percent, according to Yandex. Free float is about 54 percent. After the sale, Baring’s stake will fall below the CEO’s holding, according to JPMorgan & Chase Co.
The Yandex shareholders’ sale resembles the secondary offering of Russian social-network and online-game operator Mail.ru Group Ltd. (MAIL), in which billionaire Alisher Usmanov’s USM Holdings Ltd. sold $532 million of shares last month, Belov said.
Yandex said yesterday its board approved a program to repurchase as much as 12 million shares through Nov. 14. Yandex had about $895 million of cash and cash equivalents on its balance sheet as of Dec. 31.
To contact the reporter on this story: Ilya Khrennikov in Moscow at firstname.lastname@example.org