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. Last Updated: 07/27/2016

Grocer Hits the Road With IPO in London

The country's biggest grocery retailer, Pyatyorochka, said Monday that it had set a price range of $13 to $16 for a planned initial public offering of Global Depositary Receipts representing 30 percent of its capital.

The discounter said in a statement that the price range would imply a market valuation of the company between $1.99 billion and $2.45 billion. The roadshow and book building for the IPO were to start Monday, it said.

The IPO is aimed at raising between $598 million and $735 million, excluding over-allotment.

Pyatyorochka, which has been opening 50 to 60 new stores per year over the last three years, will offer approximately 11.5 million shares in the form of just under 46 million GDRs on the London Stock Exchange.

The statement said the selling shareholder was providing a 15 percent over-allotment option of 6.9 million GDRs.

Pyatyorochka will become one of only two listed Russian retail stocks.

In November, Sedmoi Kontinent carried out an IPO on the local market to raise 2.3 billion rubles ($82.94 million). The shares have low liquidity because of a small free-float.

"Funds raised at the [Pyatyorochka] IPO will not go into the company," Renaissance Capital said in a research note.

"Offered shares will be sold by founding shareholders ... which indicates that the company will be able to fund its growth via its own cash and debt financing."

On top of its own Moscow and St. Petersburg stores, Pyatyorochka has 207 stores under Pyatyorochka's franchise operating in Russian regions, Ukraine and Kazakhstan.

Pyatyorochka's 2004 revenue rose to $1.1 billion from $760 million in 2003. Net profit for 2004 was $74 million, up 120 percent on 2003 figures.