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. Last Updated: 07/27/2016

Evraz Moves to Boost Liquidity

EvrazholdingEvraz is expected to raise about $330 million from the 5 percent offering.
Evraz Group will offer another 5 percent of its shares for public trading, a move set to significantly boost the liquidity of Russia's biggest steelmaker.

Wednesday's sale could raise about $330 million, based on the current $6.6 billion market value of Evraz, which floated 8.3 percent of its shares in an initial public offering in London last summer, pocketing $422 million.

Shares for the secondary offering in London -- 17.5 million Global Depositary Receipts, or about 5 percent of Evraz Group -- will be put up by Crosland Global, the Cyprus-registered company that holds about 90 percent of Evraz shares, Evraz vice president Irina Kibina said on Tuesday.

Crosland is the vehicle through which majority shareholder and outgoing president Alexander Abramov, who with a personal fortune worth $2.9 billion is estimated by Forbes to be Russia's 14th-richest man, owns 59.11 percent of Evraz. The steelmaker's newly elected board chairman, Alexander Frolov, and its new president, Valery Khoroshovsky, also own shares through Crosland. Frolov holds 28.18 percent, and Khoroshovky has 1.88 percent.

"The shares are being sold by Crosland to raise the liquidity of Evraz stock and widen its circle of investors," Kibina said by telephone. The sale will diminish the stakes of all three Crosland shareholders in Evraz, she said.

Deutsche Bank and Renaissance Capital are in charge of the sale.

Russian steelmakers have made several attempts in the last year to increase their liquidity and transparency.

The fourth-largest steel manufacturer, Novolipetsk, placed about 8 percent of its shares in London in December, earning close to $700 million and bringing the amount of shares available to public trading to 13 percent, worth $1.2 billion -- the biggest free-float among Russia's steel companies.

Also in December, the second-largest steel producer, Magnitogorsk Iron & Steel Works, applied to Russia's two main bourses, the ruble-denominated RTS and the dollar-denominated MICEX, to allow the trading of its shares in the unlisted section, a move analysts tipped as a preamble to a flotation on a foreign stock exchange.

Severstal and Mechel, the other top-five steelmakers, are listed in Moscow and New York, respectively.

Evraz had been mulling a secondary flotation for some time.

Abramov told the Financial Times in October that he wanted to offer roughly 17 percent more Evraz shares in London in the "near future." In December, however, Abramov said he would wait until the share price on the London Stock Exchange reached $30.

The fall of steel prices and the rise in the cost iron ore in 2005, however, meant that such a target price was too ambitious.

"Abramov didn't quite make it to sell shares while the steel prices were riding high at the start of 2005," said Irina Lozhkina, a metals analyst with Prospect brokerage.

Late Tuesday, Evraz's share price on the London Stock Exchange was at $18.85, a 5.3 percent drop in the day's starting price.