Fix Price increases IPO volume amid high demand, deal could reach $2 bln, record for 11 years
MOSCOW. March 5 (Interfax) - Fix Price retailer has announced the price of its IPO, which has grown amid strong investor demand; the deal could be Russia's largest IPO since 2010, when Rusal placed an offering in Hong Kong, subject to the exercise of the organizers' option for an additional placement.
The company said in a statement that it had set the placement price at $9.75 per share, which is the upper limit of the $8.75-$9.75 range. The estimate corresponds to total market capitalization for the company of $8.3 billion.
The base offer size has increased about 5% from 170 million to 178.37 million GDRs amid high demand. If the option is exercised at 26.75 million GDRs, or 15% of the base size, then the transaction should total $2 billion, and the free float should be 24.1%.
It was already clear that the deal would be Russia's biggest IPO since 2021 before the financial parameters were announced. Fix Price would only not surpass the $1.5 billion offering of En+ Group in late 2017 if the price was set at the lower limit of the range, and amid frenetic demand - the bid book was signed for the full amount proposed on the first day of book-building - this scenario seemed unlikely. The outcome of the rivalry with Megafon's deal in late 2012, which was worth $1.86 billion taking into account the option, was still uncertain. Fix Price will not reach the volume of Rusal's IPO - $2.24 billion - even if the option is exercised.
This is "the largest ever IPO by a Russian retailer," Fix Price CEO Dmitry Kirsanov was quoted as saying in the statement. High interest in the deal resulted in "a strong and diversified order book" and enabled the company to increase the offer beyond its original expectations, Kirsanov said.
The base offer size without the option is 178,372,354 GDRs or 21% of charter capital. If the option is exercised, the number of publicly traded GDRs will increase to 205,128,206.
The IPO includes several cornerstone investors - Qatari sovereign wealth fund Qatar Investment Authority (QIA), as well as funds managed by BlackRock , GIC, and APG, which will buy shares at the offer price for $150 million, $150 million, $100 million, and $75 million, respectively, totaling $475 million. Based on the deal parameters, QIA and Blackrock will own approximately 1.8% of Fix Price shares each following the IPO.
The start of trading on the LSE and Moscow Exchange is planned for March 10.
The IPO structure envisages the sale of GDRs for shares in Fix Price by the company's current shareholders - Artem Khachatryan's Luncor Overseas S.A.; LF Group DMCC, which is owned by one of the chain's founders - Sergey Lomakin; Samonico Holdings Ltd, an entity of Alexander Vinokurov's Marathon Group; and GLQ International Holdings Ltd, which belongs to Goldman Sachs Group . The company, the selling shareholders, and "certain other shareholders" have agreed to a 180-day lock up, while the senior management will not sell shares for 365 days.
The organizers of the IPO are BofA Securities, Citigroup, J.P. Morgan, Morgan Stanley , and VTB Capital.
Fix Price is Russia's biggest chain of fixed-price stores. The retailer's parent company - Fix Price Group Ltd, is registered on the British Virgin Islands. Fix Price currently has more than 4,200 stores with average sales area of 210 square meters in Russia, Belarus, Kazakhstan, Uzbekistan, Kyrgyzstan, Latvia, and Georgia. In 2020, its revenue to International Financial Reporting Standards (IFRS) 16 increased 33% to 190.059 billion rubles. The chain grew by 655 stores net taking into account its own sales points and those of franchisees in 2020, which was a record result. Net profit increased 33.4% to 17.575 billion rubles.
Prior to the IPO, Lomakin and Khachatryan each owned 41.7% of Fix Price shares; Marathon Group controlled 9.9%; Goldman Sachs had 4%, and the retailer's top management held 2.3%, of which Kirsanov owned the largest stake - 1.5%.