Investment Banks Expect Dozens of 2010 IPOs

VedomostiAmong the firms planning to list this year is retailer Victoria Group, which runs the Victoria and Kvartal groceries.

Dozens of Russian companies starved for new capital are rushing to plan their initial public offerings for this year, including retailer Victoria Group and fishing holding Russian Sea.

Russian companies will raise some $20 billion in IPOs and secondary public offerings this year, according to an estimate by Renaissance Capital, or more than 10 times higher than the $1.7 billion that they earned in 2009.

This year will be a good one for Russian IPOs because investors have money and there are many companies for whom capital markets offer a good way to develop and solve problems, such as decreasing debt, said Ruben Aganbegyan, president of Renaissance Capital. Companies virtually ignored the market last year because no one was initially expecting such growth, he said.

The market was also impressed with United Company RusAl's debut, which raised $2.24 billion for a stake of 10.6 percent. Investment bankers surveyed by Vedomosti said they believed that a series of metals companies would follow in RusAl's footsteps.

Among the companies known to be planning public share sales this year are ProfMedia, SUEK, Sovkomflot and Metalloinvest. The consumer goods sector is also stepping up to the plate, with retail group Victoria and Russkoye More — or Russian Sea — planning to go public this spring, Vedomosti has learned.

Shareholders of Victoria, which is developing the chains Kvartal and Victoria, are planning to float shares on the market in April or May, two sources close to the company's shareholders said. Renaissance Capital and Goldman Sachs will be the underwriters, they said.

A source at Renaissance Capital confirmed that the bank had been asked to prepare for the listing and that it would take place this spring.

An executive at a Russian investment bank familiar with the terms of the deal said the retailer was planning to list up to 30 percent of its charter capital. The shares will come from current owners and a secondary offering. Victoria is controlled by Nikolai Vlasenko (35.42 percent), Alexander Zaribko (32.9 percent) and Vladimir Katsman (26 percent). Another 5 percent is owned by the Renaissance Pre-IPO Fund and Ist Kommerts.

Vlasenko said the IPO could be as early as this spring. "We're restructuring the company's business now, and we're changing the corporate structure so that the company will be more understandable for investors," he said.

The shareholders are still planning to sell a stake to a financial investor, Vlasenko said. Vedomosti was not able to reach Katsman or Zabriko for comment.

The press services for Renaissance Capital and Goldman Sachs declined comment.

Fish importer and processor Russian Sea has also revived its planned IPO on a Russian exchange. The group had been getting ready to list in 2008 and even held a tender to find organizers for the float.

Russian Sea could list this spring, an employee at a Russian investment bank said. A source close to the company confirmed that the group was planning to hold its IPO this year but said a final decision had not been made and that it would depend on market conditions and valuation estimates.

The company's main owner, Maxim Vorobyov, declined comment.

A source with knowledge of the deal said Renaissance Capital and VTB were mandated to organize the listing, and a source at one of the banks confirmed that information. The press services for both banks declined comment.

Russian Sea is studying the possibility of placing up to 30 percent of the group's increased charter capital on Russian exchanges, the source with knowledge of the deal said, declining to specify how much it hoped to raise.

The source said that in the 2008-09 financial year (ending June 30, 2009), Russian Sea's turnover was 18 billion rubles ($593 million), and it had earnings before interest, taxes, depreciation and amortization of 1.55 billion rubles.

The group's St. Petersburg-registered holding company is the sole founder of the three firms that control its main business interests. The holding company is 95 percent owned by the Cyprus-registered Korsiko Limited. Vorobyov told Vedomosti that he was the group's largest shareholder and that several managers at the company also owned stakes.

"Over the past year the market has had strong growth, and everyone has started thinking about raising capital at a decent price," said Andrei Arofikin, managing director at Merrill Lynch. The market has really picked up and many companies are holding tenders to select organizers, meaning the IPO peak will be this fall, he said.

There are a few windows in which IPOs are typically held: in February, in April and May and in the fall before Nov. 15, Aganbegyan said. Statistically, the April and May period is the most appealing and draws the majority of listings.

Virtually all companies that were looking to list before the crisis are again making plans, said Mikhail Sokolov, director of equity capital markets at UniСredit Securities.

"A lot of companies that didn't manage to list in time or put off deals in 2008 want to seize the day and list in the spring window, since they think that market could turn back in the second half," he said, adding that 20 to 30 Russian companies might hold an IPO in the next two years.

See also:

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