April 3, 2018 / 8:51 AM / 4 months ago

Russia's top poultry firm to test market appetite with $300 mln share sale

MOSCOW (Reuters) - Cherkizovo (GCHE.MM), Russia’s biggest poultry producer, plans to sell shares worth more than $300 million in a move that could test any effect on investors’ appetite for Russian assets by the latest diplomatic spat between Moscow and the West.

The company, also Russia’s second-biggest producer of pork, is joining a line-up of Russian firms seeking to raise capital on equity markets amid a bout of expulsions of diplomats following the poisoning of a former Russian spy in Britain.

The United States also last month slapped sanctions on Russian individuals and entities for election meddling and cyber attacks.

Cherkizovo plans to use the proceeds of the share sale, which Goldman Sachs, J.P. Morgan and Sberbank CIB are helping arrange, for general corporate purposes including debt repayment and potential acquisitions.

Other Russian companies looking to tap investors include recruiting company HeadHunter Group, which filed documents on Monday for an initial public offering (IPO) on Nasdaq aiming to raise up to $250 million, IT services company IBS which plans a Moscow IPO in April, and healthcare provider EMC which is expected to follow suit with a stock market listing.

Cherkizovo has over the past decade boosted production, playing a major role in the government’s drive to replace imports affected by international sanctions.

INVESTMENT CYCLE

“Having substantially completed our latest investment cycle, we believe we are now well positioned to capitalize on our investments and deliver strong financial results and cash flow in the years ahead,” Chief Executive Sergei Mikhailov said.

No-one at the company could immediately be reached for comment on whether it expected any fallout from the current diplomatic situation.

Its revenue rose 10 percent to 90.5 billion roubles ($1.6 billion) in 2017 and net profit trebled to 6 billion roubles.

Mikhailov added he expected a recovering economy would support consumption and the company would have more opportunities to grow its market share.

Cherkizovo, which this year canceled its London listing due to low trading, said the planned offering on the Moscow Exchange (MOEX.MM) would consist of two components and would raise funds both for the founding shareholders and the company.

The founders plan to sell a certain amount of shares alongside the sale of around 6.63 percent by Cherkizovo subsidiary APK Mikhailovsky.

The founders will re-invest some of the proceeds into the new shares to be issued by Cherkizovo. The company expects to raise around $150 million from the issue, while the sale of shares by APK Mikhailovsky and the size of the secondary component is expected to be more than that.

Cherkizovo also plans to amend its dividend policy with a view of returning at least 50 percent of its earnings to shareholders. Current policy envisages a payout ratio of at least 20 percent.

Reporting by Maria Kiselyova and Olga Popova; Editing by David Holmes

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