Once bitten…

26 October 2010 By Jason Bush

Russian companies are again lining up to list abroad. Offerings in progress in London include hypermarket O’Key and internet holding company Mail.ru. But with many IPOs to choose from, investors’ scepticism towards Russian ones won’t be easily overcome.

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Mail.ru, the Russian Internet holding company, began its IPO road show in London on Oct. 25. The price range of $23.7 to $27.7 a share values the group at between $4.78 billion and $5.63 billion. The company intends to sell a stake of around 16 percent, which would raise $765 million to $901 million at the announced range.

Hypermarket chain O'Key announced its IPO price range on Oct. 19. The price range of $9.9 to $12.9 a share would raise $377 million to $491 million, and values the group at up to $3.3 billion. The low end of the valuation implies a discount of 15 percent and 3 percent respectively to rivals Magnit and X5 Retail Group, based on a 2011 P/E multiple, sources close to the transaction told Reuters.

Shares of IRC, the iron ore division of Russian gold miner Petropavlovsk, fell 8 percent on its Hong Kong market debut on Oct. 21. On Oct. 26, the HK$1.65 price remains down 8 percent on the HK$1.80 issue price. The company had previously reduced the issue price by 30 percent, halving the size of the issue to $242 million.

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