Sberbank closed “Amazon” deal with Yandex.Market


Sberbank and Yandex have closed a deal to establish a joint venture on the basis of Yandex.Market, the parties said in a joint statement. “We want to build “Russian Amazon” on the basis of Yandex.Market, and I hope that we will succeed,” – quoted in the message the President of Sberbank German Gref.

Earlier Sberbank in the annual report for 2017 explained that its participation in ” Yandex. Market” is important both for the development of the digital ecosystem of the Sberbank and for the economy as a whole.

“This partnership will open up new opportunities for players in the e – Commerce market, small and medium-sized businesses, as well as create conditions for the growth of exports of Russian goods abroad and new opportunities for foreign market participants,” the state Bank promised.

The new company will have three main directions, the report says. The first involves the creation of an online platform where you can buy goods from different sellers. They, as promised by Sberbank and Yandex, will receive “high-quality operational, financial and logistics services”. The site itself will process orders, serve customers and deliver goods.

The company will also focus on the development of cross-border online trading. In addition, it will continue to develop “Yandex.Market”, i.e. a platform for product selection and price comparison. The technologies and infrastructure of both companies will be used to develop existing and create new services, they said.

About intention to create the joint venture on the basis of ” Yandex.Market” Sberbank and “Yandex” reported in August 2017. The Company is still estimated at RUB 60 billion at the time of the transaction, as per the message of the companies. Each of the parties will receive 45% of shares in the new company, another 10% will be included in the option fund for the Yandex.Market team.

The 45% share will allow the parties to avoid potential consequences due to sanctions: Sberbank has been under sanctions of the USA and the European Union since 2014, Yandex securities are traded on the Nasdaq us exchange since 2011.

In the 2017 report, Yandex noted: “we are confident that the future joint venture will not fall under these restrictions. However, in the future, the sanctions applied may impose restrictions on our ability to finance this joint venture.”

So, now the sanctions have not affected companies in which the sanctioned entities and persons have less than 50%, but if this bar is reduced in the future, it will negatively affect the new “Yandex.Market” JV, follows from the document.

The representative of Sberbank said that the distribution of partners shares in the JV is related to the” business logic of the enterprise”: equal shares provide parity in the Board of Directors, and the distribution of shares 50/50 would not allow to provide a share option to management.

Sberbank bought the newly issued shares of ” Yandex.Market ” at 30 billion rubles. Bank’s representative noted, bank already transferred funds and in exchange received shares from the additional issue.

The money will go to the development of the company’s full-fledged marketplace, Mr. Gref said. In 2017 Yandex.Market sold goods worth 150 billion rubles. According to the annual report of Sberbank, the target for five years is to achieve a turnover of 500 billion rubles.

JV “Yandex” and Sberbank will be headed by the current CEO of this trading platform – Maxim Grishakov. As the company reported, the Board of Directors of the site will include seven people. In addition to Mr. Grishakov, these will be both of first deputies of Sberbank – Lev Khasis and Maxim Poletaev, operational and financial Director of Yandex Greg Abovsky, Vice President for corporate development of Yandex Vadim Marchuk. Also, the Board will have two independent Directors: Gabriel Nauri – from the Sebrbank and John Oliver from “Yandex”.

Nauri previously led the international operations of the Casino Group retailer and managed its online food sales. He also holds the position of senior Advisor to the President of the Japanese retailer Aeon Group. Mr. Oliver is a senior Advisor to TPG, since 2011 – Chairman of the Board of Directors of the Russian retailer “Lenta”.

In recent quarters, the revenue of “Yandex.Market ” worsened. Thus, in the third quarter of 2017, the indicator fell for the first time in the entire time for which the company discloses its numbers – by 12% year on year to 1.1 billion rubles. In the fourth quarter, sales grew slightly by 3% to 1.4 billion rubles, but in early 2018 again began to decline – by 3% and amounted to 1.3 billion rubles.

During 2018, the situation should gradually improve, Abovsky promised investors at the teleconference this week. This can happen, he said, thanks to investments in advertising and marketing, the gradual improvement of the product and the launch of new ones.

The loss of “Yandex.Market” (adjusted EBITDA) 162 million RUB compared to profit of 560 million a year earlier. Top management explained that advertising and marketing campaigns have already been launched, as well as increased staff costs and investments in processing and delivery of orders.

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