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. Last Updated: 07/27/2016

LSR Eyes $1.5Bln Listing

Property developer LSR Group's plans to raise up to $1.5 billion in November in one of the largest London stock floats of 2007 could allow its top owner, Andrei Molchanov, to become one of the country's richest men with a personal wealth of $5 billion.

Banks have valued the company, which focuses on property development and building materials in St. Petersburg at $6.9 billion to $8.6 billion prior to the offering, sources close to the firm said Wednesday.

"Everyone is now focusing on November. December is not a good time for a placement," the source said, adding that the firm's market value could reach $9.5 billion after the IPO, making it one of the most highly valued Russian developers.

Banking sources close to the LSR deal said they believed its IPO would be supported by the fundamental strength of the Russian commercial property and housing market, which is booming on the back of rising incomes and economic growth.

"The Russian discount appears to be decreasing. ... LSR has very strong positions in St. Petersburg, where the housing market is rising very aggressively as there is a shortage of appropriate housing," said one source close to the placement.

"Building-materials producers haven't done placements in London over the past 10 years, so there should be strong interest," another source said.

Molchanov, 36, controls 82 percent of LSR and has a close relative that is a high official in City Hall.

The city's Deputy Governor Yury Molchanov, who oversees investments and property, has acknowledged Andrei as a member of his immediate family but denied he had ever helped him.

The IPO, even if done at the lowest end of the valuation range would give Andrei Molchanov personal wealth of $5 billion.

"It could potentially raise questions with investors, but so far nobody has expressed concerns. People tend to look at fundamentals," one source said.