Russian Sea priced shares in its initial public offering at the low end of the expected range and cut its size, adjusting to weaker-than-expected investor demand, the company said Friday.
The seafood producer set the price at $6 per share, compared with an indicative range of $6 to $8, and said it expected to raise $90 million in the IPO, valuing it at $477.2 million. The company was seeking to raise $130 million to $170 million by selling 21.7 million shares, but has cut the size of the offering to 15 million shares.
"This is a fair price. Investor interest was restrained because the company gets the bulk of its income from wholesale distribution, not production. And such a business model involves big risks," said Alexei Krivoshapko, director of Prosperity Capital Management.
A source close to the deal said the offer size was cut because the selling shareholder was not happy with the price.
The firm's controlling investor, Maxim Vorobyov, was supposed to receive approximately half the proceeds of the offering, but after he decided to sell fewer shares, he will get about $25 million, with the rest going to the company, the source said.
Vorobyov joins a long list of entrepreneurs who have tapped or are seeking to tap international and local markets for cash amid renewed appetite for emerging market assets.
VTB Capital and Renaissance Capital were acting as joint bookrunners and coordinators of the deal.
Dozens of Russian companies plan IPOs this year, with some investors predicting the total raised could exceed $20 billion, approaching the record levels seen in 2007.
United Company RusAl already raised $2.2 billion in January via an IPO in Hong Kong.
Next week, fertilizer firm UralChem and coal miner KTK could raise $900 million in two IPOs, possibly followed by Russian drugs distributor Protek, which aims to raise up to $400 million by the end of April.