PJSC “RussNeft” performed IPO and placed 20% of ordinary shares on November 25, 2016 with 550 rub per share. The Company has raised 32.4 bn RUB. in the offering. The shares were sold to investors by the Cyprus based Belyrian Holdings Ltd. controlled by the family of Mikhail Gutseriev, the founder and the Chairman of the Board of Directors of the oil company. In course of IPO the company was valued at 161.8 bn RUB., and IPO results indicated a 1.5%.value growth.
This is the largest IPO deal since the July placement of Alrosa and the first oil company IPO in the last 10 years, reported Aleksander Afanasiev the Chairman of MOEX Board of Directors. Rosneft performed IPO in London and Moscow in 2006.
It means that the price of the shares that were sold exceeds the average price based on the initial range of 490-600 RUB. per share. Further it was narrowed to 540-600 RUB. All the money raised will be received by the Gutseriev family, but Mr. Gutseriev told on Friday that the funds will be used for PJSC “RussNeft” debt redemption and purchase of the new assets. PJSC “RussNeft” net debt as of June 30 makes up $1.6 bn and equals З EBITDA debts. Also the company is expected to purchase oil producing assets from Forteinvest by April 2017.
It has been a long way to public offering for PJSC “RussNeft”, initially it was planned in 2006, Gutseriev said. Then in 2007 the Federal Tax Service issued eight claims to the former and current shareholders of PJSC “RussNeft” with the requirement to acknowledge the shares sale and purchase deals as non-valid and claimed the securities to the state. In a year the Federal Tax Service withdrew its claims. By that time Mr. Gutseriev left for London and agreed on the Company’s sale to Oleg Deripaska’s structures. The businessman came back to Russia only in 2010. “There is a film called “Long Way in the Dunes”. PJSC “RussNeft” took a long way to IPO, though it was not in the dunes, but in Moscow corridors of state officials, Ministry of the Interior, Prosecutor’s Office and the business”, Gutseriev said.
“The Company was valued at 161.8 bn RUB. as IPO results show, being $2.5 bn at the Central Bank rate. $2.5 bn is a good start”, - Gutseriev reported.
Neither the Company nor the organizers disclose the names of investors. It is only known that offer was exceeded by demand by 30%. 10% of demand was provided by natural persons, 2000 of orders were submitted by them, told Boris Kvasov, VTB Director of Equity Management. The order for IPO participation was identical both for the private and institutional investors, Pavel Sokolov, Aton Deputy Director says. All the clients determined the quantity and the price of the shares in the order, it was satisfied at the single price of placement, he added.
90% of demand was provided by the Russian institutional investors. There were very few foreign investors, including those from Asia, Kvasov said. Along with that none of Safmar Group Companies owned by Mr. Gutseriev, neither the bank nor the pension fund took part in this deal, Avet Mirakyan, Safmar General Director ensured Vedomosti. According to him the largest order was submitted for the fifth share of the proposed securities, amounting to 4%, though Mirakyan did not disclose the name of the buyer and the size of the package.
On the first day PJSC “RussNeft” shares were listed higher than the placement price, it rose up to 605 RUB., the bids closed at 558 RUB. (1.5% growth, 164.1 bn RUB. capitalization). 491 deals at cost of 17.6 mln RUB. were concluded on Friday and 2247 deals at cost of 32.4 bn RUB. were concluded at OTC market.
The quotes grew irrespective of the market fall (MOEX index dropped by 0.23%) and oil prices decrease (Brent fell by 2.4% down to $47.82) Aleksey Potapov, UFG Wealth Management analyst says. Further dynamics will depend upon situation in the oil industry and on how successful implementation of PJSC “RussNeft” targets. There are no reasons for a long-term growth of PJSC “RussNeft”, Vasily Tanurkov, AKRA analyst says.
“I am very grateful to the investors. You won’t be disappointed”, Mikhail Gutseriev promised. According to him the shareholders will start receiving the dividends from 2018. In order to make a 6% dividend yield, the same Lukoil has, PJSC “RussNeft” needs to pay around 10 bn RUB. on the basis of the current capitalization, Potapov remarks. It goes together with the fact that this year the Company expects to get a 13 bn profit.
Potapov also says: “Considering that RussNeft intends to pay 50% of net profit as dividends less funds reservation for the investment program and interests on the credit instruments, it has at least to double its net profit”.
In general the offering was a success, Tanurkov says. “It is a long-term perspective issue whether PJSC “RussNeft” shares will be the blue chip, for the moment it will be a second tier company with all the pros and cons of the status”, Potapov resumes.
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