Phosagro raises $538 million in London IPO

Phosagro raises $538 million in London IPO

2:38 PM, 15th July 2011
Phosagro raises $538 million in London IPO


LONDON, UNITED KINGDOM: Phosagro become the seventh Russian company to float on overseas markets this year as private business owners seek to tap capital markets that have rebounded following the financial crisis.

The offer valued Phosagro, whose Chairman and 10 per cent shareholder, Vladmir Litvinenko supervised Russian Prime Minister Vladimir Putin’s PhD thesis, at $5.2 billion against an early analyst estimate of $6.04 billion to $8.77 billion.

“They definitely were not greedy,” said one investor who took part in the IPO. He added he believed the order book was nearly two times subscribed.

Uralsib, Analyst Vadim Kotikov said Phosagro was valued with a discount to Minnesota, US-based rival Mosaic, with the enterprise value to earnings before interest, taxation, depreciation and amortisation at around 6.

“If we assume that Mosaic multiples are fair, Phosagro has at least 10 per cent upside potential, in reality around 20,” said Kotikov.

“I think that the price met market expectations. The shares have good potential, taking into account the good state of the fertiliser market,” Otkritie, Bank Analyst, Denis Gabrielik said.

Fertiliser has been a hot sector in 2011 due to growing demand for food supplies and biofuels.

Phosagro priced its IPO at $14 per global depositary receipt, or $420 per share, compared with a GDR price range indicated at $14 to $14.50. The original range was $13 to $16.50.

Proceeds from the IPO could increase to $594 million if an overallotment option is exercised in full, taking the size of the stake sold to 11.4 per cent.

© Reuters




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