Detsky Mir wins $355m IPO game
Posted on 09 February, 2017 by Thierry Heles, editor
The children’s retailer has floated on the Moscow stock exchange at a valuation of approximately $1bn, providing an exit to the Russia-China Investment Fund.
Detsky Mir, a Russia-based children’s retailer backed by the Russia-China Investment Fund (RCIF), raised 21.1bn rubles ($355m) yesterday in its initial public offering on the Moscow stock exchange, according to the Financial Times.
RCIF is a joint fund established by the Russian Direct Investment Fund (RDIF) and China Investment Corporation, the respective sovereign wealth funds of Russia and China.
Detsky Mir offered approximately 33.6% of its total share capital, pricing shares at 85 rubles at a company valuation of 62.8bn rubles. The company floated at the bottom of its range, which had been set at 85 rubles to 105 rubles per share.
The company will begin public trading tomorrow.
Founded in 1957, Detsky Mir operates a chain of retail stores offering children’s toys and clothing. The company currently owns 525 stores.
The proceeds will help Detsky Mir open approximately 250 new stores by 2020, with 70 locations planned for 2017.
The flotation marks the first time a company has entered the stock exchange in Russia since western countries imposed sanctions on the country in 2014 following its annexation of Crimea.
Detsky Mir had initially sought an IPO in London in 2013, but the plans were put on hold due to the sanctions.
RCIF purchased a 23% minority stake in Detsky Mir in 2014 for an undisclosed sum. It secured an internal rate of return on investment of more than 90% and sold a 10% stake during the offering. The deal marks the first exit for RCIF.
Diversified conglomerate Sistema, the majority stakeholder in Detsky Mir, reduced its stake from 72.57% to 50%.
Kirill Dmitriev, co-chief executive of RCIF and chief executive of RDIF, said: “Detsky Mir is an example of the fast-growing Russian company, which demonstrates impressive results and its growth will accelerate alongside the resumption of growth in the Russian economy.
“Despite a challenging macroeconomic situation, Detsky Mir has managed to achieve an EBITDA growth of more than 50% in the nine months of the last year.
“The success of this deal confirms strong demand from international investors for public placements of top quality Russian companies. It has also opened the door for other Russian issuers looking at public markets.”
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