State-owned Russian Railways unit TransContainer priced its IPO near the bottom of the range to raise $400 million in London and Moscow, giving investors exposure to its vast rail network.
TransContainer , which counts aluminium giant UC RUSAL and French carmaker Renault among customers using its fleet of cargo carriages, said it had set its London offering at $8 per Global Depositary Receipt, after a forecast range of $7.7-9.9, valuing it at over $1.3 billion.
Demand for the offer came from Russian domestic funds plus international emerging market and infrastructure-focused mutual funds, attracted by the firm’s growth potential, a source close to the deal said.
The float was the fourth Russian IPO this month after Internet firm Mail.ru , retailer O’key and construction firm Mostotrest raised a combined $1.8 billion last week.
Unlike the others, TransContainer is being sold by a government-owned entity rather than private individuals, making it an early example of Russia’s $60 billion asset sale program to help cut the budget deficit and attract overseas investors.
“This is definitely positive for the company. External investors bring better corporate governance to Russian companies and the valuation should improve,” UniCredit Securities analyst Dmytro Konovalov told Reuters.
Russian Railways President Vladimir Yakunin said in a statement that the IPO had been positively received by international investors.
But Andrey Goltsblat, managing partner at Russian law firm Goltsblat, warned that investors may not experience an easy ride in Russia.
“All investors in a company should be treated equally, but this is not always the case ... The Russian market has a particular regulatory, legal and business landscape for potential bidders to navigate and investors will need to tread carefully,” he said.
UniCredit’s Konovalov was more optimistic, pointing out that Russia’s high profile shareholder disputes had involved oligarchs rather than the state.
Mikhail Fridman’s Alfa Group, for example, has been at the centre of two of the most bitter disputes of recent years, warring over telecoms and oil assets part-owned by Norway’s Telenor and Britain’s BP respectively.
TransContainer’s Moscow-listed shares would be priced at $80 each on the MICEX and RTS exchanges. Each GDR is worth 10 shares. (Reuters)