Russia’s no. 1 children’s retailer hopes to raise up to $434.5m via IPO

By Andrei Skvarsky.

Detsky Mir, Russia’s number-one children’s goods retailer, hopes to raise up to 26bn roubles ($434.5m) through a planned initial public offering (IPO) of shares to be managed by several banks including Credit Suisse, Goldman Sachs and Morgan Stanley.

The company will float 247.9m shares during the IPO, including an over-allotment option. The offering is expected to exclusively consist of secondary shares. They will be priced at between 85 roubles ($1.4) and 105 roubles ($1.8), according to a Detsky Mir statement.

There will be post-IPO free float of about 33.55 per cent if full use is made of the over-allotment option.

The IPO will be held on Moscow Exchange.

The statement contains Detsky Mir’s first official communication on its potential valuation, according to which the company is worth between 62.8bn and 77.6bn roubles (between $1bn and $1.3bn).

Russian business conglomerate Sistema intends to maintain majority ownership of Detsky Mir in the medium term, and all other selling shareholders plan to retain stakes in the company after the IPO, Detsky Mir said when announcing the IPO on January 16.

Besides Credit Suisse, Goldman Sachs and Morgan Stanley, the IPO book runners will include UBS Investment Bank and Sberbank CIB, the investment arm of Sberbank, Russia’s biggest lender.

Detsky Mir, which was set up in 1947, runs 525 stores in 178 cities in Russia and Kazakhstan. It has opened more than 270 stores in the last three years alone and plans to open about 250 more by 2020.

The company’s revenues have yearly been growing by about 30 per cent over the past several years. Detsky Mir has a share of the Russian children’s goods market that is more than three times that of its nearest competitor.


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