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. Last Updated: 07/27/2016

Buyers Scramble for Razgulay Stock

A share offering by top grain processor, Razgulay, was six times oversubscribed Monday as global investors bought into the country's first large agro-industrial firm to list.

The initial public offering raised $144 million, valuing the company at $509 million, a company statement said.

Razgulay placed its shares at $4.80 each in Moscow, at the top of a forecast range, and they were trading at $5.35 on the RTS exchange in late afternoon, up 11.5 percent from the placement price.

Investors were attracted by the Russian farm sector, which has been boosted by high commodity prices and consolidation following its post-Soviet collapse.

Analysts were divided over the company's prospects.

"There's upside for the share price," said Victoria Grankina, senior analyst at Troika Dialog. "There's great demand for companies with consumer exposure and this is one of them."

But Aton Research said in a note that the market had not factored in operational risk, including a poor reputation in the debt and capital markets and a modest near-term growth outlook.

Razgulay, also Russia's top rice producer and third-largest sugar firm, listed 30 million shares in the IPO, including 6 million new shares, constituting a 28 percent stake in the firm.

The company, which has acquired nearly 40 smaller firms in the last 10 years, said its market capitalization was expected to be about $509 million.

"We believe the level of interest and demand for shares we have received from investors in Russia and internationally are a strong vote of confidence in the future success of the company," Razgulay president Igor Potapenko said in the statement.

The shares were listed on Russia's RTS exchange and the ruble-denominated MICEX exchange.

Russian companies are obliged by the market regulator to list their shares at home before listing abroad -- a move designed to boost domestic market liquidity. Razgulay has not yet spoken of any plan to list abroad.

A market source, who did not want to be named, said the IPO was six times oversubscribed with the shares going mainly to long-only investment funds in Russia, Britain, Sweden, Germany, Italy and Switzerland.

Potapenko said last month the company would spend 20 percent of the IPO proceeds to buy a rice-processing plant in southern Russia and to buy up all the shares in subsidiaries where it has a controlling stake.