A Russian search engine is set to embark on what could be the biggest float by an online firm since Google raised $1.67bn (£1bn) back in 2004.
Yandex, which was used by 38 million unique users in March, plans to sell its shares at between $24 and $25 apiece when it makes its debut in New York today. The stock was initially on track to be sold at between $20 and $22 apiece – but the search engine pitched for a higher range as investors, spurred on by the success of the social networking site LinkedIn's float last week, queued up for a piece of the action yesterday.
The revised guidance means that Yandex could raise as much as $1.4bn with its listing on the Nasdaq exchange. The group, which could be valued anywhere from $7.7bn to $8bn, controls 65 per cent of Russia's internet search market. Last year, its earnings rose by a heady 90 per cent to $135m on sales that grew by 43 per cent to $445m.
Hopes are running high in the wake of the LinkedIn initial public offering, with the networking site's shares more than doubling in their public trading debut last Thursday. But the buzz has reminded some of the stretched valuations seen during the dot.com boom at the turn of the century.
Besides the LinkedIn float, investors have also seen Microsoft pay $8.5bn for Skype, the internet phone service, in a recent deal that led many to criticise the software giant for overpaying.
Still, the Yandex float does come against the backdrop of expectations of strong growth in online advertising – something that is set to boost further the company's bottom line.
Forecasters at GroupM, for instance, expect internet advertising to contribute 37 per cent of global advertising growth this year.Furthermore, the media consultancy, which is a division of the advertising group WPP, reckons that internet advertising will overtake newspaper spending next year, boding well for businesses such as Yandex.