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Evraz Raises $422M In Soft London IPO

Published: June 3, 2005 (Issue # 1075)


LONDON - Russia's biggest steelmaker Evraz Group made a quiet London debut on Thursday after raising $422 million in an initial public offering (IPO) that valued the steel and mining group at $5.1 billion.

Evraz ranks among the world's top 15 steelmakers and joins a wave of Russian firms listing in London, after telecoms group Sistema raised $1.6 billion in February and retailer Pyaterochka wrapped up an IPO last month.

Two and a half hours after trading opened Thursday, Evraz global depositary receipts (GDRs) were trading at $14.38, down 0.8 percent from their IPO price of $14.50.

Analysts said the decline was in line with European peers, but that Evraz, as a new entrant, was likely to suffer more from any negativity towards the sector.

"If people get cold feet on the steel cycle, they'll punish this one more than the rest," said one, declining to be named.

Steelmakers have benefited from strong demand from China in recent years but prices have slipped back lately.

Evraz Chief Financial Officer Pavel Tatyanin said this was caused by a winding down of stocks and that high iron ore and coal costs should continue to underpin steel prices.

"It's very good news for us because we pursue an integrated model and we source more than 50 percent of our iron ore and coal internally," he said.

Evraz sold 29.1 million GDRs, or 8.3 percent of its issued share capital, in its IPO at $14.5 apiece. The firm had set an indicative price range of $13.5 to $17 per GDR.

There is an over-allotment option of up to 4.37 million GDRs, which could raise a further $63.3 million if exercised by investment bank Morgan Stanley.

Despite strong world demand for steel, some brokers saw the lower-end pricing of Evraz GDRs as a reflection of the metal market's volatility.

"Current market sentiment regarding steel stocks clearly affected the placement price, as steel shares have shown considerable weakness globally over concerns about future prices for the metal," Aton brokerage said Thursday in a research note.

"By placing the shares at the lower end of the original range, Evrazholding has not capped potential upside, while the high end of the range would have stretched valuations a bit too much," the note said.

Controlled by CEO Alexander Abramov, Evraz produced 13.7 million tons of steel in 2004.

The firm controls the Zapadno-Sibirsky, Nizhniye-Tagilsky and Novokuznetsky steelworks and has said it will use the IPO proceeds to buy mining assets in Russia and Ukraine, as well as downstream operations outside Russia.

(Reuters, SPT)





 


ALL ABOUT TOWN

Thursday, Oct. 30


Dental-Expo St. Petersburg 2014 concludes today at Lenexpo. Welcoming specialists from throughout the federation, the forum is an opportunity for dentists to share tricks of the trade and peruse the most recent innovations in technology and equipment, with over 100 companies hocking their wares at the event.



Friday, Oct. 31


Put your grammar and logical thinking to the test in a fun and friendly environment during the British Book Center’s Board Game Evening starting at 5 p.m. today. The event is free and all are welcome to attend.



Saturday, Nov. 1


The men and women who dedicate their lives to fitness get their chance to compete for the title of best body in Russia at today’s Grand Prix Fitness House PRO, the nation’s premier bodybuilding competition. Not only will men and women be competing for thousands of dollars in prizes and a trip to represent their nation at Mr. Olympia but sporting goods and nutritional supplements will also be available for sale. Learn more about the culture of the Indian subcontinent during Diwali, the annual festival of lights that will be celebrated in St. Petersburg this weekend at the Culture Palace on Tambovskaya Ul. For 100 rubles ($2.40), festival-goers listen to Indian music, try on traditional Indian outfits and sample dishes highlighting the culinary diversity of the billion-plus people in the South Asian superpower.



Sunday, Nov. 2


Check out the latest video and interactive games at the Gaming Festival at the Mayakovsky Library ending today. Meet with the developers of the popular and learn more about their work, or learn how to play one of their creations with the opportunity to ask the creators themselves about the exact rules.



Monday, Nov. 3


Non-athletes can get feed their need for competition without breaking a sweat at the Rock-Paper-Scissors tournament this evening at the Cube Bar at Lomonosova 1. Referees will judge the validity of each matchup award points to winners while the city’s elite fight for the chance to be called the best of the best. Those hoping to play must arrange a team beforehand and pay 200 rubles ($4.80) to enter.



Tuesday, Nov. 4


Attend the premiere of Canadian director Xavier Dolan’s latest film “Mommy” at the Avrora theater this evening. The fifth picture from the 25-year-old, it is the story of an unruly teenager but the most alluring (or unappealing) aspect is the way the film was shot: in a 1:1 format that is more reminiscent of Instagram videos than cinematic art. Tickets cost 400 rubles ($9.60) and snacks and drinks will be available.



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