Thursday, May 5, 2011

Yandex IPO - The Google of Russia

By the end of May, Yandex, the most popular search engine in Russia is launching its IPO on Nasdaq exchange. Yandex holds over 60% market share of Russia`s internet search market, with Google down at little over 20%.

This could prove to be a great bet on Russia`s future development as an emerging market. Search engines like Yandex and Google take advantage of a booming economy by providing ad opportunities on the best place to advertise these days, the World Wide Web.

The Google IPO was initially priced too cheap and presented a great opportunity for early buyers. If history repeats itself, a somewhat similar scenario could unfold again.

This Google or Baidu(another great story by the way) of Russia, if you will, had its share of controversy lately by providing the FSB, the Russian secret service with some information regarding certain blogger. Some tried to spin this as a risk associated with Russia.
However every communication and Internet company in both eastern and western world is bound to cooperate with the state aparatus and the state agencies if required. All communication companies in US and Europe have provided, are providing and will keep providing information based on request of government agencies. I see this as a non issue that shouldn`t affect the IPO or the company going further.

Dmitry Medvedev's plan to create a Silicone Valley in Russia is apparently on track. During the Silicone Valley visit, the meeting with CEOs of Google, Twitter, Cisco, Apple and other tech companies was but an early signal towards such future developments.
In a bid to ease Russia`s reliance on energy sector, the creation of  a strong internal technology market could provide the needed diversification and  greatly boost economic growth.  This unfolding scenario will give Yandex even more growth opportunities going further.  Its 60% market share of Russia`s Internet search market could provide the key element in this largely unexplored and undervalued growth market.

Will this IPO fare well and present good growth opportunities? I`d say "yes". Russia is at the moment among the most undervalued emerging markets and could be the source of some amazing success stories.

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