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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, Dec. 18


Improve your English and knowledge of British culture during today’s FORM lesson at the British Book Center. These free English lessons with a native speaker elaborate not only on grammar particulars but cultural topics as well. Today’s event will discuss the BBC Two documentary “Victorian Farm Christmas.”



Friday, Dec. 19


Test your mastery of parlor games during Game Evening at the British Book Center. Learn how to play a variety of classic, mentally challenging games and use your newly acquired skills to crush weaker opponents. The event beings at 5 p.m.



Saturday, Dec. 20


The city’s Babushkina Park on Prospekt Obukhovskoy Oborony will be invaded by dozens of rocking-and-rolling Santa Clauses during today’s Santa Claus Parade. Not only will they parade through the park but there will also be competitions amongst the festively-clad participants and a musical master class. There will also be a prize for the best-dressed Santa Claus.


Stock up your record collection during the Vinyl Christmas Sale at the KL10TCH bar on Konyushennaya ploschad today. Spend the afternoon perusing the records for sale while listening the classic, clean sound of records spinning out hits from a variety of musical genres and time periods.



Sunday, Dec. 21


TheZenit St. Petersburg basketball team returns to the northern capital this evening for a matchup with Krasny Oktyabr, a Volgograd-based basketball club. Tickets for the game, which tips off at 6 p.m. this evening, can be purchased on the club’s website or at their arena, Sibur Arena, on Krestovsky island.


Satisfy your sugar cravings during Sweet New Year, an ongoing seasonal festival at the Raduga shopping center. Each weekend of December will welcome hungry visitors to taste hundreds of different kinds of desserts made from a plethora of sweet treats. Workshops are open to visitors and seasonal gifts can also be purchased for those rushing to finish their New Year shopping.



Monday, Dec. 22


Pick out the latest fashions as holiday gifts for loved ones or as early presents for yourself during the Christmas Design Sale at Kraft on Obvodny Kanal, starting on Dec. 20 and continuing through Dec. 27. Designer clothes will be on sale every day of the week or you can buy something more festive to decorate the home while sipping on hot coffee and perusing the various master classes.



Tuesday, Dec. 23


Meet Arctic explorers Fedor Konukhov and Viktor Simonov during SPIBA’s and Capital Legal Service’s event “Arctic Expedition” this morning in the Mertens House business center at 21 Nevsky Prospekt. The meeting will discuss the explorers’ ongoing eco-social project and how companies can use the project as a unique marketing opportunity. Email office@spiba.ru by Dec. 22 if you wish to attend.



To have your event included in All About Town, email tot@sptimes.ru



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