During the IPO, shares of “RussNeft” will be available also for individuals. During the IPO, up to 20% of “RussNeft” ordinary shares would be offered to investors by Cyprus Belyrian Holdings Ltd. Through this company the Gutseriev family controls 67% of ordinary shares of the oil company and 75% of its overall share capital. The rest belongs to Glencore.
It means that the Gutserievs would be able to gain 29-35 billion roubles, or $444-544 million. The order book will be closed on November 24th. After the floating, at least 47% of ordinary shares, which corresponds to 55% of the capital, would remain under control of the Gutseriev family. The representative of “RussNeft” did not name the reason why the major shareholder is prepared to reduce its stake below the controlling interest.
For the moment it is rather difficult to predict whether “RussNeft” offering raises rush demand, managers say to Vedomosti. Rather, the floating would be “behind-the-scenes”, Russian-investors-oriented or targeted at foreign long-stayed investors, says one of the interlocuters. It is anticipated that non-state pension fund of B&N Group would take part in the share placement, says another one.
If the IPO proves not to be significantly oversubscribed in the end of book building, the book runners – BKS and ATON – will offer the securities to their individual clients, reveals the source close to one of the insiders.
But there won`t be large scale advertising campaign, he assures. “RussNeft” shares would be offered to both institutional and individual investors, confirms Deputy General Director of the ATON Pavel Sokolov. He did not evaluate the demand from individuals. “It would become clear at the moment of book closure”, says ATON representative, citing his words.
The proposals to buy have been already received by employees of B&N Bank, also owned by Gutseriev family. On Friday, they received the letters of invitation to acquire “RussNeft” shares on special terms, which include reduced brokerage commission, said bank`s employee, close to one of the managers.
Individual participation in the IPO is common practice in developed countries. But in Russia such approach has not been proven very successful, narrates portfolio manager of Management Company CapitalЪ Vadim Bit-Avragim. “People`s” IPO were conducted by Rosneft and VTB. But five years later, in 2012 the state bank was forced to buy back its shares because of their downfall.
Bank-organisers did not get a call option to acquire “RussNeft” shares, the company informs. Under the IPO on foreign grounds, the banks have a greenshoe option to buy up to 15% of outstanding shares at the transaction price within one month. But Moscow Stock Exchange does not have such practice, according to one of the organisers and a source close to insider.
On Friday the “RussNeft’ top-managers told the investors about development strategy. By 2025 the company intends to boost the production from present 7.9 million to 11 million tons/year, due to development of Achimov deposits of Tagrinskoye and Sredne-Shapshinskoye oilfields in KhMAO, as well as to acquisition of Orenburg production assets from another Gutseriev`s oil company “ForteInvest”. This transaction of $270 mln. is to be closed in April of 2016.
“RussNeft” also emphasizes it has one of the lowest capex-operation cash flows ratios in the industry – 0.4, while the average figure for the industry constitutes 0.65, and for the industry leader Rosneft – 0.3.
High level of net debt, amounting to $1.6 billion or 3.1 EBITDA as of June 30th, was identified as major risks by one of the IPO organisers, “VTB Capital”, in its review. Due to that particular reason plus due to volatile macroeconomic environment bank has indicated such broad interval of company`s evaluation. The quality of the corporate governance also raises concern, says one of the participants of the Friday meeting of investors and “RussNeft” management. Thus, in 2014 the Company gave RUB38.1 billion loan to its affiliated companies, and as of 31.12.2015 it reached RUB53.5 billion, the company`s reports states. That was a loan in foreign currency provided to the B&N Group controlled by the Gutserievs, the source cites the “RussNeft” top-managers explanations. “Not the best practice”, he resumes.