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$400 Million Corridor
// The "System" defined their financial appetite
The biggest Russian Service Holding – AFK System announced the price of the primary distribution of its shares (IPO) at London stock exchange. After the distribution (due to happen in the beginning of March), System wants to get $1.2-1.6 billion.
The experts considered the price frame quite obscure and called the upper limit a too optimistic evaluation of the AFK business.
AFK System has assets in the sphere of telecommunications, high-tech, insurance, realty, tourism, retail trade. The principal assets are 50.4% of MTS shares. 56% of MSTN shares, control stock in Komstar-the United Telesystems, concern Scientific Center, ROSNO, Intourist, Detsky Mir. According to the results of the first nine months of 2004, the gain was $4.1 billion. The assessed value of AFK assets exceeded $7.7 billion (as for September 30, 2004). The founder of the System Vladimir Evtushenkov has more than 75% of the holding. The rest of the shares belong to the sounders and the Board of AFK.
They told they were planning to distribute the shares of the System at LSE on October 6,2004. On request of the exchange, the distribution should start not later than 180 days after the application. In other words.the deadline is the Beginning of March. Yesterday they officially announced about the price corridor for the suggested within the limits IPO 79.6 million Global Depository Receipts (GDR) of System: from $15 to $19.5 per one GDR.
The ratio of the GDR to shares is 50 to 1, so the price of one share is $750-975. System is about to distribute some 25% of its shares.
“The company called a reasonable price and I suppose that there will be demand for its shares. The company will be able to get the sum it needs, i.e. $1.2 billion minimum. The IPO success gives System good financial opportunity to participate in the privatization of Sviazinvest”- says Elena Bazhenova, the analyst of IG Aton.
“According to our calculations, the real price of GDR of System is $15.7-17.8. But it’s hard to evaluate the announced parameters. The lower limit is low, the top one is high. When evaluating the assets of System two questions arise: what discount on the main assets of the holding to give and how to estimate non-telecommunication business of AFK. There's not much information on that, and the business as such is too original to evaluate it quickly and precisely” – said Andrey Bogdanov, the Head of the Analytical Service of Alfa Bank.
Dmitry Zakharov
All the Article in Russian as of Jan. 26, 2005
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