Element mulls M&A in Russia within 12 months

MOSCOW. May 31 (Interfax) - PJSC Element , the parent company of the Russian microelectronics group formed by Sistema PJSFC and Rostec, might carry out mergers and acquisitions in the "electronic parts and modules" and "precision engineering" segments in the next year, Element president Ilya Ivantsov said.

"Our main activity in the area of M&A will be specifically in two areas - in electronic parts and modules and in precision engineering. I think that in the course of the next 12 months - we must and will act prudently here, of course - but if we manage to agree on terms that create value for all shareholders, then we'll see these deals," Ivantsov told reporters at an event to mark the start of trading of Element shares on the SPB Exchange.

The company plans to carry out M&A only on the Russian market, but as for expansion in general, Element intends to test opportunities on foreign markets, he said.

"But we will test them carefully. Naturally, we have to be in the countries where we're planning to develop. But this will be a balanced and incremental approach. I think that before the end of the year we'll be able to tell you how we've advanced in this area," Ivantsov said.

Element's press service told Interfax that this refers to potential expansion in friendly countries with a combined population of 2 billion people, which could mean Asia and the Middle East.

Element carried out an initial public offering on Thursday that was priced at 223.60 rubles per 1,000 shares, valuing the company at 90 billion rubles, not including the proceeds. The IPO totalled 15 billion rubles, including stabilization shares, and resulted in a free float of 14.3%.

Element was formed in 2019 with the microelectronics design, development and manufacturing assets of investment group Sistema and state corporation Rostec. Element's key portfolio companies are chip factory Mikron and microchip and semiconductor manufacturer Angstrem-T. The group now includes more than 30 enterprises.

Element's IFRS net profit surged 93% to 5.3 billion rubles in 2023 on revenue up 46% to 35.8 billion rubles. EBITDA jumped 68% to 8.7 billion rubles. The electronic component base segment (microcontrollers, discrete semiconductors, analog integrated circuits, devices based on RFID technology, navigation receivers, etc.) generated 83% of the group's revenue; electronic parts, modules and instruments (power supply units and inverters, base station transceiver modules, LTE communication modules, etc.) generated 9%; and the precision engineering segment accounted for 5%.