Russia's largest bank and digital innovation front-runner Sberbank will create a 50/50 joint venture with internet major Mail.ru Group (MRG) in the field of transportation and food delivery on the basis of Citimobil and MRG's Delivery Club, the companies announced on July 25.
The JV is a challenge for Yandex, another internet major and Russia's most valuable digital business. Yandex develops its own food delivery solutions under the Yandex.Eda (Yandex.Food) umbrella. Together with Sberbank, Yandex operates joint venture Yandex.Market marketplace, one of the largest investments in the Russian e-commerce space.
Now Sberbank has signed a memorandum of understanding (MoU) with MRG, with a binding agreement to follow after the approval of the board, anti-monopoly services, etc. The ambition is to create a "leading Russian platform" for online-to-offline solutions for transportation and food services.
Both companies plan to invest RUB64bn ($1bn) together should the target indicators be reached over the first 12 months. The target valuation for the joint venture is RUB100bn, and it is planned to grow at 30% annually, and IPO in "several years" is not excluded.
"JV with Mail.ru will add exposure for Sberbank’s ecosystem to food and transportation markets (via online delivery service Delivery Club and taxi service Citymobil) that have a potential to grow to more than RUB1 trillion over the next three years (compounded annual growth rate (CAGR of > 30%)," BCS Global Markets commented on July 25.
MRG will contribute 100% of Delivery Club and 22.7% of its taxi service Citimobil, as well as miniroty stakes in other related joint ventures such as Instamart food delivery service. Apart from cash, Sberbank would contribute 35% in the Foodplex venture.
The competition between MRG and Yandex is tightening. As reported by bne IntelliNews, most recently Yandex.Taxi snapped a valuable asset, Vezet taxi operator, from MRG.
Sberbank siding with MRG in the promising transportation and delivery segments is also another sign that no further integration between the bank and Yandex should be expected beyond their joint project Yandex.Market.
"[The joint venture with MRG] is like Sberbank announcing a war with Yandex," unnamed top manager from the digital sector told The Bell on July 25, as taxi and food delivery are the two fastest growing segments for Yandex. The Bell also claims that Sberbank and Yandex are considering breaking up the Yandex.Market joint venture.
After setting up Yandex.Market in 2018, reports suggested that Sberbank, which holds a "golden share" in the company, is staging a hostile takeover of Yandex. But as the founders and shareholders of Russia’s most valuable digital company made changes to the shareholder structure, no deal followed. In 2019, Sberbank preferred Rambler Group to Yandex as the main media platform for its growing digital ecosystem.
Vedomosti and the Bell point to the potential conflict of interests, owing to Sberbank's golden share in Yandex and the CEO of the banker German Gref sitting on Yandex's board.
"Yandex has initially constructed [a] relationship with Sberbank as a long-term mutually beneficial partnership," the CFO of the company, Greg Abovsky, told Vedomosti. Yandex is abiding by these principles and hopes Sberbank will do the same, he added.