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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)





 


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Thursday, Apr. 24


Learn more about Denmark during the Danish Business Delegation’s visit to SPIBA this evening starting at 5:30 p.m. at the Danish Culture Institute. Danish Consul general Klaus Sorensen will be in attendance and the buffet following a presentation on Danish companies in Russia will be the perfect opportunity to network with the assembled businessmen.


AmCham’s Human Resources Committee Meeting is scheduled for 9 a.m. this morning in their St. Petersburg office. Check their website for more details.



Friday, Apr. 25


Light Music presents the main events for their Cultural Kitchen project at Loft-Project Etagi today. A B2B event that focuses on Finnish food, arts, travel, music and design, the evening will conclude with a dinner by chef Jyrki Tsutsunen and dancing to music by Aino Venna. The event, which began yesterday with presentations by tourism and cultural institutions, concludes today with a preview of Finland’s Flow festival and other musical events. Invitations are available from www.culturalkitchen.fi.



Saturday, Apr. 26


At 6 p.m. this evening, stylist Liliana Modigliani offers 50 simple ways to up your style quotient with beauty tips at the Galeria shopping center on Ligovsky Prospekt. The event is part of the final day of the shopping mall’s Fashion Saturday sales event, this week focusing on top brands located on the ground floor as well as presentation from fashion experts on sprucing up your spring look.



Sunday, Apr. 27


Families shouldn’t miss Childhood Planet 2014, the trade fair that started yesterday and concludes today at LenExpo. Not only will goods and services be provided for children and families but the event hopes to promote Russian brands and eco-friendly products using the latest technology available in the childcare industry.



Monday, Apr. 28


The Hotel Indigo will be the site of SPIBA’s Acting Skills for HR and Other Managers master class this morning starting at 9 a.m. The event will begin with coffee before moving on to the class itself and conclude with a tour of the recently opened hotel. Confirm attendance by Apr. 24.



Tuesday, Apr. 29


Improve your English at the British Book Center’s Interactive English Lesson tonight at 6 p.m. Students at pre-intermediate and intermediate levels are welcome discuss topics that are selected to help learners master the more difficult aspects of English grammar and vocabulary.