Rusagro received an order from state-run Sberbank for as much as 81 percent of the commodity producer’s initial public offering in Moscow next week, securing demand for the shares.
Sberbank, Russia’s biggest lender and a manager of the sale along with Credit Suisse Group, Renaissance Capital and Alfa Capital Markets, will buy as much as $200 million of the shares, according to a notification to investors from Rusagro obtained by Bloomberg News. “This order will be subject to a share allocation process once all orders are received,” it said.
Russian companies, holding IPOs for the first time since 2007, are struggling to attract investors. Fertilizer maker UralChem canceled an offer last week and Russian Sea Group sold shares at the bottom of its price range April 16. Rusagro, owned by lawmaker Vadim Moshkovich and family, plans to raise $246 million to $309 million by selling 18.2 million shares.
“Moshkovich was probably concerned by unsuccessful IPOs by UralChem and Russian Sea, which fell short of demand,” said Ilya Brodsky, vice president of Specialized Research and Investment Group, which manages $500 million in Russian and CIS assets. “With Sberbank backing, the risk of the IPO being pulled becomes close to zero.”
The order for Rusagro shares from Sberbank, the company’s largest creditor, means that the lender is ready to buy 65 percent to 81 percent of the stock on offer, Bloomberg calculations show.
State-run Vneshekonombank bought almost 30 percent of a $2.2 billion Hong Kong IPO by United Company RusAl, the world’s largest aluminum maker, in January. RusAl, controlled by billionaire Oleg Deripaska, slumped by as much as 32 percent in Hong Kong trading after the listing and was still down 23 percent on Tuesday. Sberbank, also a RusAl creditor, said before the metal producer’s IPO that it might buy shares to support the sale.
Strikeforce Mining & Resources Plc., a Russian molybdenum producer also controlled by Deripaska, is gauging demand for a Hong Kong IPO that may raise as much as $200 million, according to a person with knowledge of the plan.
The company, known as SMR, may start taking orders from institutional investors as early as next week, according to the person, who declined to be identified because the information is not public. BOC International Holdings, the investment banking unit of Bank of China, Deutsche Bank and Renaissance Capital are managing the sale, the person said.
Rusagro spokesman Sergei Tribunsky declined to comment. Alexander Baziyan, a spokesman for Sberbank, was not immediately available to comment.
“Sberbank is providing strong backing for Rusagro’s IPO to succeed, while its bid in the IPO should raise concerns for Sberbank shareholders,” said Alexei Krivoshapko, a director at Prosperity Capital Management, which oversees more than $4 billion in Russian and CIS equities.