Seafood Company Plans $200M IPO

Seafood producer Russkoye More, or Russian Sea, plans to raise up to $200 million in an initial public offering as equity markets recover and domestic demand for fish surges.

Cyprus-registered Corsico Limited, which owns 95 percent of Russian Sea Group, will sell the group's ordinary shares on Russia's two main exchanges, the RTS and MICEX, Russian Sea said in a statement. Renaissance Capital and VTB Capital have been appointed as joint coordinators and bookrunners, the statement said.

The statement did not give a date for the listing or the size of the stake.

Russian companies raised just $1.7 billion in share offerings last year, a figure that will increase almost 10-fold to $20 billion in 2010, Renaissance Capital forecast in January. The 2010 IPO season was kicked off in January with United Company RusAl's $2.2 billion listing in Hong Kong, and several companies have since announced or revived plans to go public.

A source with knowledge of Russian Sea's plans told The Moscow Times that a roadshow could start in two weeks but that it was too early to comment on the possible size of the stake.

"The company is planning to attract $200 million, but the exact amount of shares to be floated will be decided by the shareholders as soon as the price range is clear," the source said.

Vedomosti reported in January that the group would sell up to 30 percent of its charter capital in a listing. Russian Sea Group's charter capital was 7.2 billion rubles ($244 million) as of 2008, according to Interfax's SPARK database.

A spokesperson for Renaissance Capital declined to comment. VTB Capital was not immediately available for comment.

Russian Sea will use the cash raised for investments in production, fish farming operations, a partial repayment of debt and an increase of its working capital, the statement said.

When asked about the group's debt, the source with knowledge of the deal said Russian Sea owed money to state-run Sberbank and VTB, but that the debt level was "quite comfortable."

Russian Sea, founded by brothers Maxim and Andrei Vorobyov in 1997, initially imported fish from Norway. The group has since expanded into fish farming and processing, including a production facility in the Moscow region that makes more than 60 types of seafood.

The company, which had 2009 turnover of 17.3 billion rubles ($585 million), had 12 percent of the Russian fish and seafood market in 2009, the group said on its web site, citing research by Global Reach Consulting.

Andrei Vorobyov, who is a deputy head of United Russia's faction in the State Duma, sold his stake in the holding to Maxim Vorobyov in 2002, Vedomosti reported at the time.

Infomost Communications, a public relations firm representing Russian Sea, told The Moscow Times that Maxim Vorobyov was the company's main shareholder, declining to elaborate.

CEO Dmitry Dangauer said in Monday's statement that the decision to go public was based on favorable market conditions.

“We have seen consistent growth in the demand for fish and seafood products in Russia, including during the recent economic downturn," he said. "We are confident that the revival of economic activity, combined with the shift in consumer preferences toward fish and seafood products, will provide us with a firm basis for further development.”

Sergei Vasin, a consumer markets analyst at Metropol, said the company's optimism about the seafood sector was justified. "The fish sector is on the rise, and this is why the company is so excited to carry out a successful IPO," he said.

Russia's fish catch was up 30 percent in 2009, compared with a year earlier, while processing increased by 20 percent, the Federal Fisheries Agency said earlier this month.

But Vasin warned that the market was still only warming up to new listings.

"If you look at the market, investors are still cautious," he said. "If the company launches an IPO one of these days, it may get a price lower than it would be offered six months from now, when investors are likely to feel more confident."

See also:

Most of Moscow’s Salmon Not Fit for Purchase Says Watchdog

Russian Supermarket Chain Wins Suit Against Pro-Kremlin Activists

Russia Needs to Develop Vladivostok Fish Hub to Boost Economy