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UPDATE 3-Russian steelmaker Evraz seeks London listing
October 17, 2011 / 9:56 AM / 6 years ago

UPDATE 3-Russian steelmaker Evraz seeks London listing

* Steel company seeking entry to FTSE 100

* Seeks more liquidity, broader share base

* May seek to raise funds in the future -- source

* Shares up 3.7 percent

By Megan Davies

MOSCOW, Oct 17 (Reuters) - Russian steelmaker Evraz , part-owned by billionaire Roman Abramovich, has become the latest in a wave of Russian miners to seek a higher international profile via a London stock market listing.

Evraz, which will also move its domicile to Britain, told investors on Monday the move would give it a broader shareholder base, better long-term access to capital markets and improved liquidity. A listing could see Evraz enter the FTSE 100 index of leading shares.

It is the third Russian company after miners Polymetal and Polyus Gold to announce plans for a London listing in recent weeks. .

Resources and metals stocks already dominate the London blue-chip index, accounting for nearly a third of the FTSE by market value.

“It is about increased profile, increased liquidity, and trying to grow the business and give it a bit more of an international shareholder base rather than just emerging markets specialists,” said a source close to the deal.

Evraz, with a market capitalization of more than $8 billion, has three steel mills in Russia as well as operations overseas. It is part-owned by the oligarch Abramovich, famous for owning Chelsea football club in London.

Evraz plans a share exchange offer to complete the move, whereby London-listed Evraz Plc will buy up to 100 percent of the share capital of Evraz Group S.A.

The company is currently Luxembourg-domiciled and its shares are traded in London in the form of global depositary receipts.

The company’s shares were up 3.7 percent on the London Stock Exchange on Monday, adding to a rise of 19 percent for the month so far, after it announced a special dividend last week. .

Under the swap, shareholders will receive nine new shares in Evraz for each existing share they now own.

INCREASED LIQUIDITY

The source who spoke to Reuters said while there will be no fundraising alongside the listing, there may be at some point in the future. “They do not want to raise money at these kind of (valuation) levels,” the source said.

Igor Lebedinets, analyst at VTB Capital, said that Evraz may try and increase the free float for its main shares at some point, but the company may want to wait in the hope that the valuation improves.

Lebedinets said Evraz’s main motivation for the move was to increase liquidity, but thought the trend of companies moving to London was on a case-by-case basis - and there was unlikely to be a large number of Russian companies following suit.

“We now have a free float of about 25 percent, which is enough for a premium listing,” Evraz’s Finance Director Giacomo Baizini told reporters. “Under the deal, the company has no plans to place new shares, especially in current market conditions.”

Evraz said it expected to be included in the FTSE 100 Index and would be the only steel stock in the UK share market.

Rival Tata Steel is listed in Mumbai and ArcelorMittal is listed in Luxembourg.

Evraz said that, following the move, it would seek to maintain a long-term average dividend payout ratio of at least 25 percent of its consolidated net profit.

Biggest shareholder Lanebrook, which currently owns 72.25 percent of the company, has agreed to accept the offer, the company said.

Evraz said it planned a management roadshow for the next two weeks and that final acceptances of the offer were due by Nov. 4. It expects to start trading on the London Stock Exchange on Nov. 7 and to be included in the FTSE at the index’s next reshuffle on Dec. 19.

Morgan Stanley and Credit Suisse are acting as joint sponsors to Evraz, the company said.

Evraz also announced on Monday its crude steel output rose by 4 percent year-on-year in the third quarter of this year.

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