FinTech: Tech Giant Yandex To Acquire Pole Position In Russia’s Fintech Industry

September 24, 2020 | FinTech, News, Takeovers and Buyouts
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Yandex will pay $5.5 billion to acquire online bank Tinkoff.

Investors made a bee-line for the stock of Russian technology giant Yandex (NASDAQ: YNDX) after it bid Tuesday for Tinkoff, a leading online bank in the country.  Yandex shares touched a record high after analysts and investors apparently thought it was a marriage made in heaven. (The Moscow Times)

The company’s shares have been on a moonshot after its bid for Tinkoff became public on Tuesday evening. The stock traded above 5,300 rubles ($69) — at an all-time high and almost triple what it was a year ago.

It has often been dubbed as “Russia’s Google.”

Agreement in principle: Yandex and TCS

According to MarketWatch, Yandex and TCS Group Holdings (LON: TCS) have agreed in principle to a deal whereby the former will acquire Tinkoff for $5.48 billion, payable in cash-and-stock.

The deal comes after Yandex agreed to terminate its joint venture with Russia’s largest state-owned bank Sberbank (MCX: SBER) in June. It raised enough funding thereafter to pile on $3 billion of cash on its balance sheet by end-June.

Fintech leadership

Fintech could be the missing piece in Yandex’s digital ambitions – it launched a financial super-app called YandexGo in August. The app allows the user to do everything from taxi booking and ride-sharing to groceries and food delivery.

The transaction to buy Tinkoff will also catapult Yandex to the top of the Russian fintech league.

The deal “offers Yandex a way to leapfrog into pole position in the Russian fintech space, making its ecosystem comparable with Sberbank’s,” said VTB Capital analyst Mikhail Shlemov. Besides, it was a quicker option to building a fintech from scratch.

Meanwhile, both companies are profitable. Though Yandex earned $180 million in profits last year, Tinkoff raked in over $500 million.

Synergy

Many aspects of the businesses of both companies are similar or complementary.

Coupled with a common entrepreneurial mindset and aggressive growth plans, it is unsurprising that the merger is a “win-win.”

“We are the two best IT companies in the country and there can be a lot of synergy,” said Oleg Tinkov, Tinkoff founder and chairman.

Related Story:  Russian Blockchain-based Trade Finance Platform Factorin Clocks $500M Turnover

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