Foreigners Acquire 16% of Cosmetic Giant

Kalina, the nations No. 1 perfumes and cosmetics holding, is to be 16 percent foreign owned after additional shares were issued and sold exclusively for hard currency.

With a face value of 10 rubles (36 cents), the actual price of shares was $5.80, making Kalina about $9 million richer with a market value of $54 million.

Urals-based Kalina was founded by Rikapr-fond and various individuals. The holding includes the Ural Gemstones factory in Yekaterinburg; the perfume and cosmetics plant Alie Parusa in Nikolayev, Ukraine; the Almalikski household chemicals factory in Uzbekistan; and a laundry materials plant in Omsk, western Siberia.

Kalina makes more than 300 brands.

The issue of 1,735,030 ordinary shares 16.7 percent of Kalinas charter capital was placed in its entirety Oct. 11. The buyers were all foreigners.

"The placement report is as yet unregistered, and therefore I am not in a position to reveal the details," said Alexander Petrov, director for economics and finance at Kalina. He did not divulge the companys plans for the $9 million received.

In August, Kalina head Timur Goryayev said the concern was interested in regional cosmetics enterprises and was considering merger partners.

Petrov said the shares were acquired by three legal entities. Two regional venture funds RABO Black Earth B.V. and GIMV/CORPEQ Uralsfund B.V. bought 48,108 and 78,076 shares, respectively. Representatives of the funds are already part of the Kalina board. Therefore, the company had to notify the Federal Securities Commission of their purchase by the funds. The name of the third company is a secret. It owns more than 15 percent of Kalina.

RBAO Black Earth B.V. and GIMV/CORPEQ Uralsfund B.V. are regional venture funds of the European Bank for Reconstruction and Development. The capital of each of these comprises $30 million from the EBRD and $20 million from investor companies. The investor in RABO Black Earth is the Dutch financial group RABO and in GIMV/CORPEQ Uralsfund the investor is Belgian venture fund GIMV.

Neither the Russian Perfume and Cosmetics Association nor Kalinas competitors would speculate about who the third buyer is.

"There are about 100 top international perfume and cosmetics that have an annual turnover of $30 million and up. And the Kalina shares could have been bought by second-tier companies," said Vladimir Dzyuban, head of sales with Moscows Novaya Zarya.