UPDATE 3-Mail.Ru and Yandex may dual list in Moscow

Thu Feb 20, 2014 11:59am EST

* Mail.Ru preparing for additional listing - CFO

* Yandex cites benefits, does not commit to timetable

* Both forecast slowing revenue growth for 2014

By Megan Davies and Anastasia Teterevleva

MOSCOW, Feb 20 (Reuters) - Russian Internet companies Mail.Ru and Yandex may seek to list their shares in Moscow to add to primary listings in London and New York, they said on Thursday.

Russian firms with an overseas focus have tended to list on international exchanges such as London and New York so they can gain inclusion on indices such as the FTSE, to widen their shareholder base and boost their valuation.

President Vladimir Putin has however led a drive to boost Moscow as a financial centre and to promote its bourse.

London-listed Mail.Ru's chief financial officer Matthew Hammond said the company plans to list its shares in Moscow in the near future.

Mail.Ru went public in London in November 2010, listing global depositary receipts and raising $912 million.

The additional listing in Moscow will be a secondary placement of shares supported by three major strategic shareholders, Hammond said. A Russian listing can help employees trade stocks and boost liquidity, he said.

"It was the topic of the discussion of the board yesterday and the board in principle has approved," Hammond said on a conference call for analysts. "So I think we will be looking to move forward with that certainly in the near term."

It was unclear whether the offering would be only to strategic investors or to the public, or if it would involve new or existing shares.

New York-listed Yandex later responded to a question on a conference call about whether it would follow suit by saying its board would be supportive of it having a Moscow listing.

"Our board is generally supportive of a (Moscow) listing," said Greg Abovsky, vice president of investor relations. He did not commit the company to a timetable for such a move but said there would be three main benefits.

"We are a Russian company and it makes sense for us to have a secondary dual listing on the Moscow exchange. It benefits our employees and allows them to transact our shares in the local market and there could be positive benefits from indexation such as inclusion in various exchanges or other indices," he said.

Yandex listed in New York in May 2011.

SLOWING GROWTH

Yandex and Mail.Ru on Thursday both predicted slowing revenue growth for 2014. Yandex's shares fell nearly 8 percent on their open in New York while Mail.Ru's shares fell 4 percent in London.

Russia became Europe's largest Internet market in 2011 after several years of rapid broadband development, but growth in many online businesses such as Internet advertising has since slowed.

Yandex expects revenues to grow by 25-30 percent this year, slower than the 39 percent it reported for 2013.

"The market could ... be disappointed by Yandex's (full-year 2014) guidance, although in practice there is likely scope for the company to outperform its guidance with earnings upgrades over the year," analyst David Ferguson at Renaissance Capital wrote.

Mail.Ru, part-owned by Russia's richest man Alisher Usmanov, forecast revenue growth of 22-24 percent, driven by growth in advertising and games, but below the 29.6 percent growth it reported for last year.

However the company, which operates popular Russian-language social networking sites as well as email and online games platforms, said it would broadly maintain core profitability this year, with EBITDA - earnings before interest, tax, depreciation and amortisation - margins of 53-54 percent, slightly below the 55.1 percent recorded in 2013.

Mail.Ru's net profit for 2013 rose 36.1 percent to 11.4 billion roubles, year-on-year, while its net cash balance at the end of the year was 31.3 billion roubles ($877 million) and it had no debt outstanding.

Analysts have been expecting Mail.Ru to use its cash to pay a special dividend and to sell a stake it holds in Russian payment transfer company QIWI, which went public on the Nasdaq last year.

"We believe the market is disappointed that Mail did not announce another large cash return," Ferguson wrote.

Mail.Ru and Yandex last year struck a deal under which Yandex shares advertising profits with Mail.Ru in exchange for Yandex's advertisers being given access to Mail.Ru's users.

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