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A troika of IPOs head to London

Russian companies are rushing to raise cash ahead of the privatisation drive as three firms set price ranges in one week.

ChelPipe, the Russia’s third largest pipe producer, set a price of $3.5 to $4.6 a share and global depositary receipt on Wednesday ahead of its offering in London.

The Chelyabinsk based firm follows coal producer Koks and pump manufacturer HMS Hydraulic to set a price range this week.

Russian firms are expected to list around $3 billion in the first two months of the year, compared to $5.5 billion in the whole of 2010.

Last year investor sentiment was dampened by the Rusal IPO, which saw its value drop more than 30 per cent in four months, and a number of failed listings.

Dmitry Smolin, an analyst at Uralsib, believes Chelpipe provides strong exposure to increasing capital expenditure in the oil and gas market, but its position behind TMK in the market limits its potential.

“We believe that Chelyabinsk shares at the bottom of the range ($3.5/share) would offer investors a 20 per cent discount to TMK … which is reasonable due to TMK’s superior growth,” he wrote in a note to investors.

A listing at a higher price could also drive rivals’ share prices up by revaluing the market, Smolin added.

Severstal subsidiary Nord Gold is also expected to announce its price range in the near future having already announced plans for an IPO. The gold producer could raise as much as $1 billion, the Financial Times reports, which would value the company at $5 billion.

“The success of Nord Gold’s IPO may largely depend on market confidence about the sustainability of the commodities rally,” Renaissance Capital analyst, Boris Krasnojenov, wrote in a note to investors last week.

He added that investors had received the announcement positively, while Severstal was set to benefit as the cash being raised would be used to pay off debt to the steel producer.

January has traditionally been a slow month for announcing IPOs, but this week’s hat-trick gives weight to analysts’ predictions of Russian companies raising $30 billion in 2011.

Investor sentiment towards Russian offerings is likely to be determined by the first IPOs of the year, Tom Blackwell, managing director of M Communications in Russia, said in a recent email.

Meanwhile, Renaissance Capital director Alexander Merzlenko said companies planning to delay IPOs were tempting fate as the privatisation drive could flood the market, Vedomosti reports.

themoscownews.com

27.01.2011