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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, July 31


Develop your leadership abilities during a lecture by famous Russian author and coach Radislav Gandapas. The event starts at 9 a.m. at 5 Lodeinopolskaya Ulitsa. The price for entry is 20,500 rubles ($570).


Relax and enjoy a Parisian atmosphere with some romantic and laidback jazz tunes during the Night of French Music at Lenny Jam Cafe, 63 Ligovsky Prospekt. The entrance fee is 250 rubles ($7).


The Women’s Business Club is hosting a Beauty Brunch where participants are invited to discuss the latest news in the beauty industry and listen to lectures by professional stylists in the business.



Friday, Aug. 1


Bikers from all around the world will gather to take part in a parade, extreme shows and rock concerts during the International Biker Festival that revs its engines today and runs through Aug. 3 near Olgino Hotel, 4/2 Primorskogo Shosse.


The Peter and Paul Fortress will be turned into an open-air cinema today and tomorrow as part of the 5th International Short and Animation Film Festival. A huge screen across the fortress walls will air short films non-stop with board games, photo sessions and other activities also on offer for visitors. For more information, visit www.opencinemafest.ru



Saturday, Aug. 2


Gatchina Palace Park Museum will host its second annual Night of Light, an impressive audio-visual show across the night sky. Tickets are 600 rubles ($16).


If graphic design is more your thing then check out Illustration Day, where you will be able to visit an exhibition, attend lectures by professionals and even show experts some of your own work. The event starts at noon at Zona Deystvia, 73 Ligovsky Prospekt. The entrance fee is 350 rubles ($10).



Sunday, Aug. 3


History lovers shouldn’t miss the chance to see reenactments of World War I battles in Pushkin at noon. Besides exciting war scenes, visitors can enjoy live music, historical costumes, an equestrian show and a fancy-dress parade starting from the Moscow gates.


Garage Sale, the popular and growing flea market where nothing is priced over 500 rubles ($14.11), starts today at noon in Loft-Project Etagi, 74 Ligovsky Prospekt. Be sure to get in early to score a bargain. Entry costs 50 rubles ($1.40)



Monday, Aug. 4


Continue the working week with a calm and steady mind with a free yoga lesson at 7 p.m. in the Bukvoyed store at 23A Vladimirsky Prospekt.



Tuesday, Aug. 5


Visit The Romanov Dynasty doll exhibition today, where more than fifty porcelain dolls depicting Russian rulers, and made by Olina Ventzel, will be on show. The exhibition continues through Aug. 31 in Sheremetyev Palace, 34 Fontanka Naberezhnaya.



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