Zinc giant leads new wave of Russian firms to London market

Click to follow
The Independent Online

A fresh round of Russian companies is heading for the London Stock Exchange, with the biggest zinc producer in the former Soviet Unionbecoming the latest company to eye an LSE listing.

The Chelyabinsk Zinc Plant, which accounts for more than 60 per cent of Russia's production of the metal and 2 per cent of world production, has appointed Credit Suisse as a global co-ordinator for its initial public offering. Chelyabinsk has confirmed it is considering a dual London and Moscow listing, similar to the arrangement the oil giant Rosneft went for this year.

It is not yet clear how much money the Siberian conglomerate wants to raise or what proportion of the company will be floated. But what is known is that Chelyabinsk wants to tap into the London market to raise funds to buy raw materials and deposits beyond Russia's borders. The IPO is expected to take place this year or early in 2007.

Sergei Moiseyev, the managing director of Arkley Capital, which manages Chelyabinsk's parent company, has confirmed that London and Moscow are likely to be the placement floors. "Parameters of the deal will be elaborated in the process of consultations with banks," he told the daily Vedomosti newspaper.

Like many other large industrial operators in Russia, Chelyabinsk has spent the past few years trying to bring in Western-style corporate governance and transparency in preparation for such a move.

This month the company announced business was booming and that zinc production in the first half of this year was 33 per cent up on the same period last year, while sales were 200 per cent up year-on-year.

Chelyabinsk is not the only Russian company looking to raise cash on the LSE in the near future. The consumer giant Sistema, which is listed on the LSE and is controlled by the oligarch Vladimir Yevtushenkov, has hired Goldman Sachs to handle the probable $3bn (£1.6bn) flotation of its technology arm Sitronics.

Mr Yevtushenkov, who is the eighth richest man in Russia and worth $7.7bn according to Forbes, is said to be keen to float as many of Sistema's daughter companies on the LSE as possible.

Sistema itself raised $1.3bn in 2005 when it floated in what was then the largest Russian IPO in London. Sitronics will be the first Sistema daughter company to come to market; a first tranche of shares is expected to be offered in London in February. A float of Sistema-Hals, Sistema's real estate arm, is expected to follow.

Sitronics is Russia's and eastern Europe's biggest manufacturer of industrial and consumer electronics and has 24 factories in Russia and eastern Europe selling globally. Its business spans telecoms, surveillance, microchips and IT, and it is believed to be developing a consumer brand to manufacture televisions, computers and household electrical goods.

The company was valued this year by Merrill Lynch at $2bn but has since acquired a Greek telecoms equipment maker and the company's management believes it is worth closer to $3bn.