MOSCOW, February 8. /Offset. TASS Irina Mandrykina/. The owners of the largest Russian producer of phosphate fertilizers “FosAgro” will sell 5% stake in the company to a consortium of sovereign wealth funds in the framework of the secondary offering, which amid rising world prices for mineral fertilizers will be the second major transaction in the Russian market after a successful placement of shares of the company “Detsky Mir” and a demonstration of the growing appetite of investors to Russian securities.
Jointly with the RDIF in the consortium, in the acquisition of a minority stake in the securities will involve six major sovereign funds from Asia and the Middle East and a number of other investors.
According to the head of the Fund Kirill Dmitriev, therefore, the consortium members intend to successfully invest.
“We believe in the attractiveness of the Russian stock market and in cooperation with foreign partners willing to participate in many important locations. SPO (secondary public offering – approx. TASS) securities “FosAgro” has become a good opportunity for us and our international partners to invest in one of the leading manufacturers of mineral fertilizers, which is the lowest level of production costs in the industry and has significant export potential. We believe in continued growth and further strengthening its positions on the Russian and world markets,” – said Dmitriev.
the Consortium of investors has filed an application under SPO $ 200 million
Since the beginning of the year, the price of shares of “PhosAgro” on Masuria increased by 3.9%. With the beginning of the year to 30 January, the growth rates of these securities was 17%, when the stock price reached 3 thousand 48 roubles per one paper. However, from January 30 to February 8, the value of a share “FosAgro” on Masuria decreased by 11.4% to 2.7 thousand roubles per share.
Thus, if the application of the consortium will be fully satisfied, its share will have more than half of the sold package, about 3.4% of the share capital, or 4.4 million shares that can be purchased at the market price at $ 200 million.
“Proceeding from current quotations, the application RDIF and partners covers more than two thirds of the package, but the final allocation, as always, depends on demand from other investors. “FosAgro” – very high quality paper, which is always pleasing to its minority shareholders, in terms of dividends, the level of corporate governance and so on, I think that the demand is strong enough from other funds. And the final allocation of the RDIF can change. But, of course, the presence of an anchor investor to such a large package it is a positive factor”, – said TASS Raiffeisenbank analyst Konstantin Yuminov.
at the same time part of the funds raised from the SPO, will be used to purchase 3% of the shares member of the Board of Directors Igor Antoshin, said “FosAgro”. The proceeds from the SPO, the company will not receive. The timing of the closing of the bookbuilding, price and distribution of the securities will be determined at the absolute discretion of the joint bookrunners and the selling shareholder.
the Owners of 74.5% stake in the company has assumed the obligation not to sell the assets within three months after the secondary offering. In addition, the company agreed not to sell its own shares during the same time period.
a Good “window” to embed
that the company will consider the February “window” to use the possible tools to improve the capitalization, the head of “FosAgro” Andrey Guriev reported in the last year, without naming specific variants. However, after a successful IPO “Children’s world” before companies opened a “window” of opportunities for placement. In particular, the first Deputy President – Chairman of the management Board of VTB Bank Yuri Soloviev – on the sidelines of the world economic forum in Davos reported by TASS that “any company not under sanctions with a fundamentally good business performance can easily accommodate (in the market)”.
“In our view, the timing is quite fortunate, because the prices of phosphate fertilizers have started to grow quite significantly – no one in the end of last year, did not expect that they will recover from $ 310-315 per tonne of DAP (diammonium phosphate – approx. TASS) to $ 350-360 per tonne, it is actually for the month. A lot of positive factors, the market began to look better, which is reflected well enough in the monthly quotations,” said in an interview with TASS Konstantin Yuminov.
He also noted that this year the company completes major projects – the construction of ammonia and urea, which on the one hand reduces the investment costs after its completion, on the other hand, will affect future free cash flow of the company and its ability to distribute more cash to shareholders and pay dividends.
“There is a positive Outlook on the company as a whole, so I guess the timing is quite successfully”, – said the Agency interlocutor.
Situation in the fertilizer market
however, the entire previous year, the major players of the Russian market of mineral fertilizers were perceived as unfavorable.
“For the sector of fertilizers 2016 was difficult. The prices of agricultural products started the year at a low level under the influence of another record harvest. At the same time, the supply of fertilizers with the new production capacity entered the market, outpacing demand, which has led to lower prices for fertilizers are below the threshold of profitability of marginal producers. In the background dominated in 2016, the downward trend in prices for fertilizers traders, distributors and farmers preferred to avoid significant volumes of purchases, carrying them in strict accordance with current needs,” – said in comments to the annual report EuroChem, which reduced net profit under international financial reporting standards (IFRS) by 6.4%, to $ 707,5 million
overcapacity and falling prices on the world market could not impact on the financial performance of companies. So, EBITDA of the “Akron” for the first nine months of 2016 has declined by 26% to 22.35 bn (us$ 327 million), despite net profit growth, and the main owner of Uralkali Dmitry Mazepin, speaking on the TV channel “Russia 24″ in October last year said that by the end of 2016, expects to reduce the company’s EBITDA to us $ 1.35-1.4 billion versus $ 1.9 billion a year earlier.
“FosAgro” on the exchange
“FosAgro” ranks first in Europe and third in the world in the production of phosphate fertilizers. Principal owners of the company – structure the Deputy Chairman of the Board of Directors “FosAgro” Andrey Guriev and members of his family, their share in the authorized capital is 50,28% of the shares, 14.5% of the controls, the rector of the Mining Institute (St. Petersburg) Vladimir Litvinenko, 12.7 per cent – the adviser of the General Director of PhosAgro Igor Antoshin. In free circulation are about 20% of the shares, even of 1.92% of the share capital are in the REPO. The company’s shares are listed on the London stock exchange (LSE) and Moscow stock exchange.
the Company completed an IPO on the London stock exchange in 2011, where he placed the 10.8% of the share capital at $ 42 per share, and in 2013 had a re-placement, then the structure of the family Gurevych sold a 9% stake. Last spring GDR “PhosAgro” was included in the MSCI Russia index.
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