Binnopharm Group mulling IPO, but waiting for Russian market to be able to accommodate 20 bln ruble offering
MOSCOW. Dec 18 (Interfax) - Binnopharm Group, a portfolio company of investment group Sistema PJSFC , is considering an initial public offering and is ready for one, but believes the current size of the Russian market is insufficient to accommodate the offering of at least 20 billion rubles that it has in mind, CEO Rustem Muratov told reporters.
Binnopharm has been ready for an IPO for a long time and was in a pre-IPO round back at the beginning of 2022, he said. "And the degree of readiness has not changed since then, we're just as ready," Muratov said.
Binnopharm sees both the Moscow Exchange and a Chinese exchange as a potential platform for the IPO, but it is unhappy with the current size of offerings on the former.
"Essentially, we're seeing now that all offerings are within the bounds of 10 billion rubles, which is too little for us and we don't see the point, basically. In a year, before you know it, it will already be 20 billion rubles, and this is already on the threshold of reasonableness for us. Because a sound valuation of [our] company is upwards of 100 billion rubles and selling less than 20% of shares is a strange move. Because the number of changes within the company and various types of structural elements that must be maintained for the exchange are a lot, while the money you get, frankly speaking, is little. And the point of this action is completely unclear," Muratov said.
He said the structure of demand in IPO deals is changing. Whereas before there were many institutional investors, including western ones, now it is mostly retail investors, and "large offerings are difficult for them, there's simply not enough money," Muratov said. However, the number of private investors, including wealthy ones, is growing and in time they will be able to digest larger offerings, he added.
As for the option of an offering on a Chinese exchange, it also has its own specifics, he said.
"The Hong Kong exchange is more a place where western companies can enter the Chinese market and secure their share there. But the Shanghai exchange is a live exchange, with many investors, including retail ones. But people who come to this exchange certainly want to understand Chinese business. Meaning, loosely speaking, wealthy families from continental China who are prepared to invest money, but in local Chinese business," Muratov said.
He said Binnopharm registered a subsidiary in Shanghai in June and if it decides to do the IPO in China it will be listing this company. "This is a local Chinese company that operates in China, that will already have turnover of about $100 million plus in a year," Muratov said.
The company has not yet made a final decision on the location or timing of the IPO, he said. "But our financial situation is not catastrophic, to say the least. Our debt burden at the end of the year will be less than 2. So we just don't have a terrible need to carry out an offering so as to somehow raise money," Muratov said.
Entering China
The company has already compiled a portfolio of ten products to put on the Chinese retail market, Muratov said.
"Products with various properties, some of them are trials on which we will test how the registration system in China works," he said. When these products will go on sale in China will depend on the registration process, he added.
The company is also considering entering the markets of Vietnam, Malaysia, Indonesia, the Philippines, Thailand and, possibly, Myanmar.
"In most of these countries regulation is harmonized, so having registered a platform in one of them you automatically get recognition in all of them. And this means that we'll be able to enter fairly quickly, I think. We've already begun contacting partners in these countries," Muratov said.