Russian Retail Chain achieves London IPO
Last Wednesday the Russian food retailer Lenta started trading on the main market of the London Stock Exchange. This was the first time in over a year that a Russian organisation has been listed in the UK. Despite ongoing events in Ukraine and a falling rouble, the hypermarket giant raised $952 million through offering global depository receipts, equating to a 22.1% stake in the company.
The IPO fell slightly below the expected $10 dollar share price, though Lenta is still believed now to have an equity value of about $4.3 billion. The share price fell sharply early last week, days after the initial flotation, as tensions over Ukraine intensified, but it has since recovered to about 5.8% below its initial offer price.
Lenta is expanding in sales and locations faster than any of its competitors in Russia. In 1993 it was just a cash & carry outlet in St. Petersburg; today it operates 77 hypermarkets and 10 supermarkets in 45 cities across the country. By some estimates, the company is worth as much as $6.2 billion.
As Roland Gribben of The Daily Telegraph notes, Lenta exemplifies how foreign investment and know-how can advance the immature, yet promising Russian market. For the past 5 years Lenta has been headed by a Dutch CEO, Jan Dunning. He was also responsible for involving the US investment fund, TPG Capital, the largest stake holder in Lenta in 2011. The European Bank of Reconstruction and Development (EBRD) and Russian lender VTB Capital are also shareholders.