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Sistema Seeks to Double Children’s Goods Chain Before 2015 IPO

AFK Sistema (SSA) is seeking to double the size of its children’s goods retailer, Detsky Mir, before selling a stake in an initial public offering in 2015, billionaire Chairman Vladimir Evtushenkov said.

Detsky Mir, Russia’s largest retailer of children’s goods, increased sales 14 percent last year to $893 million as it opened more regional stores. The Russian retail market for children’s goods rose 10.5 percent to $14 billion, according to Renaissance Capital.

“We are considering different options to grow our retail business as we plan an IPO of Detsky Mir for 2015,” billionaire Evtushenkov said in a Bloomberg interview this week. “Until then, we hope to double our network, both organically and through acquisitions.”

Sistema bought back 25 percent of Detsky Mir, a brand that dates back to Soviet times, from lender OAO Sberbank (SBER) earlier this month, for 4.5 billion rubles ($138 million). The deal restored its 100 percent ownership after the state-controlled lender bought the stake in 2010.

Evtushenkov declined to comment on a possible valuation for the IPO.

Last year, Detsky Mir acquired the Russian franchise of Early Learning Centre Ltd., which had 20 stores at the end of 2012, and opened 47 stores under its own brand. That boosted the retailer’s store count to 216 by the end of the year, while selling space rose 23 percent to 291,000 square meters (3.13 million square feet),according to a company report.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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