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. Last Updated: 07/27/2016

Dixy Raises $360M in Low Range IPO

VedomostiA Dixy store in Moscow. The grocer says it will spend its IPO cash on new stores, paying off debt and rebranding.
Russia's fourth-largest supermarket chain Dixy raised $360 million by pricing its initial public offering at the bottom of the indicative range on Monday.

Company spokesman Mikhail Korotkov said in an e-mailed statement that 25 million shares were bought by investors, including 10 million new shares, for $14.40 apiece.

Dixy Group, which owns food retail chains Dixy, Megamart and Minimart, ranked among Russia's topfive retail chains in terms of turnover in 2006.

Last week, Dixy cut the price range from $14.40 to $15.80 from the initial range of $16.50 to $22 after market watchers said the shares were highly overvalued.

Dixy Group's placement volume is up to 25 million shares held by the company's major shareholders or 50 percent of its charter capital.

Alexander Malishev, an analyst with Full Service Investment, said shareholders would buy back 10 million additionally issued shares at the placement price via closed subscription. Malishev said that after the IPO Dixy Group's free float would be more than 41.6 percent.

The company said it intended to use IPO proceeds to further roll out its retail chain, repay its current debts and carry out a rebranding in 2008 or 2009.

But analysts said proceeds from the IPO would likely not be spent on expanding the company, as a planned secondary issue would meet that need.

The current IPO represents "an exit strategy for private equity" that will enable investors to recoup money already invested in the company," said Victoria Grankina, an analyst with Troika Dialog.

Brady Martin, an analyst with Alfa Bank, said Dixy's IPO would pave the way for the company's strategic investors like Citigroup Venture Capital to divest from the company but would yield little in terms of growth.