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. Last Updated: 07/27/2016

Electronics Retailer M.Video Plans Share Offer in Moscow

MTA shop assistant displaying air conditioners at an M.Video outlet in Moscow.
M.Video, the country's second-biggest electronics retailer, said Tuesday that it would hold an initial public offering in Moscow by the end of the year, a move that some analysts said could pave the way for a sale of the company.

The capital raised will be used to "help us to fulfill our expansion plans," company president Alexander Tynkovan said. The company did not specify the size or value of the offering, and a spokesman declined to comment further.

M.Video has 105 stores in 38 cities, as well as online stores.

The IPO could raise $300 million to $400 million, said Dmitry Tsaregorodtsev, a senior analyst at KIT Finance.

The country's largest retail electronics chains currently control less than 50 percent of the market, with the rest accounted for by stand-alone shops and small chains.

"Big firms are trying to build as fast as they can, especially in the regions, to consolidate their hold on the market," Tsaregorodtsev said.

M.Video could be opting for an IPO as an alternative to borrowing from Russian banks, which are tightening their corporate credit terms amid the global liquidity crunch, Tsaregorodtsev said.

However, Tigran Hovhannisyan, head of research at Sobinbank, said the IPO could be a way to increase the wealth of M.Video's shareholders ahead of a possible sale of the company.

"It takes one to three years to prepare an IPO. Shortly after the launch I wouldn't be surprised if they sold everything to a big Western firm," Hovhannisyan said.

But Tsaregorodtsev said he thought expansion was the more likely goal.

"This IPO should be seen as a growth opportunity, not as a cash cow. They are trying to expand, not make a profit from this launch," he said.