* IPO planned for H1 2014, subject to market conditions
* Russia is Metro's most profitable business, No.3 market
* IPO expected to raise at least 1 bln euros
* Metro keen to invest proceeds in growth, cut debt
* Russian consumer spending buoyant despite slowing economy
By Emma Thomasson
BERLIN, Jan 20 German retailer Metro AG plans to
sell up to a quarter of its Russian cash-and-carry unit in a
London listing in coming months to raise funds to invest in the
fast-growing business and pay down debt.
Metro said its supervisory board had given its
approval last Friday for the company to prepare for an initial
public offering in London in the first half of the year, which
it said was subject to market conditions.
The sale is expected to raise at least 1 billion euros
($1.36 billion)for Metro, with analysts valuing the total
Russian business at 4-7.5 billion euros.
"We expect a listing to enable us to expand our business in
an even more dynamic way and to strengthen the balance sheet of
Metro Group at the same time," Chief Executive Olaf Koch said in
a statement on Monday.
Besides helping the Russian business grow, Metro Chairman
Franz Markus Haniel said the transaction should also give the
company flexibility for other investments and help cut debt,
which stood at 5.4 billion euros at the end of September.
"Metro's relatively geared balance sheet has been a
consistent impediment to its operational turnaround. We are
minded to be supportive of almost any move management make to
de-lever the business," Citi analysts wrote in a note.
Metro, Europe's fourth-biggest retailer, has been
restructuring to focus on cash and carry and consumer
electronics, which it feels have better growth prospects than
the supermarkets and department stores it wants to offload.
OWNER HANIEL DENIES BREAK-UP PLANS
Metro's shares, which jumped in November when Reuters first
reported the company was considering a Russian IPO, rose as much
as 2.7 percent on the news on Monday but later reversed those
gains to trade down 0.2 percent by 1234 GMT.
Analysts speculate that a Russian IPO might signal that the
company is open to more radical moves, although family-owned
conglomerate Haniel, which has a 30 percent stake in
Metro, denied a recent report that it was considering pushing
for a full breakup of the sprawling group.
Metro has more than 700 cash and carries in 29 countries and
the business accounts for almost half of group sales.
It entered Russia in 2001, with the country becoming its
most profitable unit and Metro's third-biggest market for its
cash and carry business, behind Germany and France, with sales
of 4.1 billion euros in 2012. Consumer spending is still buoyant
in Russia even as growth slows in the $2 trillion economy.
Metro is Russia's fourth biggest retailer behind X5
, Magnit and French chain Auchan. Its local
rivals include Lenta, which is controlled by state bank VTB
and private equity fund TPG, and is also
planning to float on the stock market.
The Metro listing is likely to be run by Sberbank
and Goldman Sachs, sources have told Reuters.