Shares of Russian Internet company Yandex NV surged more than 40 percent in their debut on Tuesday, in the largest U.S. initial public offering in the Internet sector since Google Inc.
Co-founders Arkady Volozh, 47, and Ilya Segalovich, 46, said the IPO was just the beginning for Yandex, which is eyeing international expansion.
"Russia deserves to have a technology company of a global level," CEO Volozh told Reuters in an interview conducted in Russian. "We're working toward that happening.
Volozh said the company's success was a demonstration that Russia is not just an energy-focused economy.
"Russia is famous for its resources," Volozh said. "But Russia also has a lot of talent... So far, there aren't many technology companies... that would work for the entire world. We believe that the scientific culture of Russia is so strong that sooner or later such a company will appear."
The IPO of Russia's most popular search engine was about 17 times oversubscribed, a source told Reuters. The intense demand for the shares comes on the heels of the IPO of U.S. professional networking company LinkedIn Corp, raising comparisons with the dot-com boom of the late 1990s.
Yandex raised $1.3 billion in its IPO on Monday by selling 52.2 million shares for $25 each. The offering valued the overall company at about $8 billion. In 2000, a group of private-equity investors led by Baring Vostok Capital Partners bought a 36 percent stake for just over $5 million.
Unlike social-networking sites like LinkedIn, Yandex's business model, driven by online advertising, has generated strong growth in earnings.
For the company to deliver on its growth proposition, however, it will have to defend its market share in Russian search, now at 65 percent against Google's 22 percent.
"Google is a great company but we are better," Chief Technology Officer Segalovich said with a smile.
He said the company has ambitions to move beyond Russia. "We have several ideas (about) how to go beyond our current business models," Segalovich said in an interview conducted in English. "Definitely there are some new business models we are trying to explore and also international expansion is one of the new areas for us."
Analysts say that the search engine devised by Volozh and Segalovich, who met as schoolchildren, has a competitive advantage over Google, because it is better equipped to handle the grammatical complexities of the Russian language.
Shares were up 40 percent at $35, after pricing at $25.