Credit Suisse, J.P. Morgan, Merrill Lynch, UBS, RenCap, Sova, Wood organising IPO for Belarus grocery chain

By Andrei Skvarsky.

Credit Suisse and J.P. Morgan Securities are acting as joint global coordinators for a planned initial public offering of shares (IPO) next month by Eurotorg, the largest grocery retailer in Belarus.

Bank of America Merrill Lynch, UBS and Renaissance Capital are among joint bookrunners for the IPO, to be conducted on the London Stock Exchange.

The other bookrunners are Sova Capital, a London-based broker that was called Otkritie Capital International up until January 2018, and Prague-headquartered advisory and brokerage Wood & Company, Eurotorg said in a statement.

The IPO is expected to raise $250m for Eurotorg, which has an estimated pre-money capitalisation of between $689m and $789m and by mid-2018 reported a year-on-year revenue increase of 9.6 per cent in terms of US dollars and a 12-month revenue of 4.21bn Belarussian roubles ($2.13 bn).

Eurotorg’s core shareholders are going to partially use the IPO proceeds to buy StatusBank, a Eurotorg subsidiary that was called Eurotorginvestbank before May 2017, for about 45.2m Belarussian roubles ($21.4m).

Most of the money to be raised by the IPO and the sale of StatusBank would be used by Eurotorg for deleveraging and reducing its foreign currency debt.

The offering will consist of global depositary receipts (GDRs). Eurotorg has announced a GDR price range of $6.95 to $7.95. Sales are due to start on the day the final pricing is announced, which would be around November 7.

About 970,000 people make purchases at Eurotorg stores every day. The company, moreover, has a loyalty programme bringing together about 2.5m people. Belarus’s total population is 9.5m.

Eurotorg controls about 19 per cent of Belarus’s food retail market. In addition to its nearly 700 stores, the chain has two online grocery retail services, which together yielded a revenue of 94.4m Belarussian roubles ($47.5m) for the first half of 2018.

Belarus’s grocery retail market was worth about 22bn Belarussian roubles (about $11.4bn) in 2017.

Penetration of modern retail formats in it stands at 46 per cent, considerably below that in most other emerging markets and roughly similar to levels that existed in Russia in 2007 or Poland in 2006.

However, format modernisation is expected to grow at a compound annual pace of 15 per cent by 2022.

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