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. Last Updated: 07/27/2016

Rusagro Postpones IPO

Agricultural group Rusagro postponed its $300 million public share offering because of global markets jitters, casting further doubts over Russian firms' plans to raise billions of dollars via IPOs this year.

"Rusagro Group today announces the decision to postpone the offering of its ordinary shares due to recent market volatility," the company said in a statement Thursday.

Last week, fertilizer maker UralChem delayed its $642 million IPO.

Although the European IPO market is believed to remain open after a successful placement by Polish insurer PZU, the U.S. market for IPOs could be facing another chill just as it began to warm up.

Russian firms had plans to flood the domestic and international markets with bonds and share placements this year after a cash drought during the country's first recession in a decade.

“Many deals will be postponed due to the market conditions,” said Andrei Sharonov, head of investment banking at Moscow brokerage Troika Dialog. “But there is still a big need this year for companies to conduct” offerings. Troika advised on IPOs last month for coal producer Kuzbass Fuel and Ukrainian egg producer Avangardco Investments Public Ltd.

Rusagro, controlled by lawmaker Vadim Moshkovich, had plans to raise about $300 million through the listing, with around half the proceeds to go to the owner and another half reinvested in the firm.

“Moshkovich was probably concerned by unsuccessful IPOs by UralChem and Russian Sea, which fell short of demand,” Ilya Brodsky, vice president of the Specialized Research and Investment Group in Moscow, said before the cancellation.

State-run lender Sberbank, Rusagro’s largest creditor, told investors last week that it would buy as much as $200 million of the sugar producer’s stock, or as much as 81 percent of the IPO. Sberbank managed the sale along with Credit Suisse Group AG, Renaissance Capital and Alfa Capital Markets. Sberbank spokesman Alexander Baziyan couldn’t immediately be reached for comment.  

Rusagro accounted for 18 percent of Russian sugar production last year, according to the company. It has seven plants that can process either 30,000 metric tons of raw sugar beets or 5,350 tons of raw sugar cane a day.

Analysts have said Russian IPOs could exceed $20 billion this year. RusAl, the world's biggest aluminum producer, raised $2.2 billion in a January Hong Kong listing, followed by $400 million by drugs distributor Protek and $90 million by seafood firm Russian Sea.

Coal miner KTK and real estate company LSR Group had to cut volumes and prices in their secondary placements.

(Reuters, Bloomberg)