Phosagro, the Russian phosphate fertilizer producer, will float a 10 to 15 per cent stake at a price range valuing the company at between $4.8-billion (U.S.) and $6.1-billion in an initial public offering in London and Moscow.
The offer range of between $13 to $16.50 per global depositary receipt values the company at a discount to the $6-billion to $8.6-billion range bankers involved in the offering initially touted, as Russian companies continue to struggle to pull off IPOs amid jittery global markets.
Only five out of 10 Russian companies attempting to sell shares in London this year have managed to go ahead with their offerings, and of the five, four have priced at the bottom end of the range.
Global Ports, the Russian owner of container and oil products terminals in Russia's far east and in the Baltic region, last week raised just over $500-million after pricing itself at the lower end of its range.
Investors welcomed the move by Phosagro to temper its price expectations, despite its position as a strategic player in growing global fertilizer markets, and said it was a sign that it was willing to listen to investors tired of Russian companies trying to wring the highest possible prices from shareholders.
"Unlike other Russian IPOs which have failed or been pulled, if you want to get the deal done you just need to do it at a lower level to entice investors," said Steven Dashevsky, a fund manager at Dashevsky and Partners. He added that Global Ports' pricing had set a good example with its stock up 10 per cent since listing last week.
In a further sign the IPO will probably go ahead, Sibur, the Russian petrochemicals group, said its board of directors on Tuesday approved a proposal to become a cornerstone investor in the offering.
One person familiar with the offering said Phosagro, which is estimated to be the world's third-largest producer of phosphate fertilizer, was willing to take a small hit on price in an effort to win the listing.
Maksim Volkov, the company's chief executive, has said it wants to float to create a currency for a wave of mergers and acquisitions expected to hit the Russian industry as it consolidates. In particular, it is eyeing a potential share swap for the government's 26.7 per cent stake in Apatit, the fertilizer producer, which is also believed to hold 41 per cent of Russia's reserves of rare earth metals.
The sale of a 10 to 15 per cent stake will not affect control of the company, which will remain in the hands of Andrei Guryev, a Russian senator who has an 81 per cent shareholding.
The company is seen as having close ties to allies of Prime Minister Vladimir Putin.
Vladimir Litvinenko, who is rector of the St. Petersburg state mining institute, holds a 5 per cent stake, while Sibur, which is buying into the offering, is owned mainly by Novatek, the independent gas producer part-owned by Gennady Timchenko, another ally of Mr. Putin.
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2011-06-28 14:21:12