By Ilya Khrennikov and Ruth David
Jan. 31 (Bloomberg) – Lenta Ltd., the Russian hypermarket chain controlled by U.S. leveraged buyout firm TPG Capital, will disclose its intention to sell shares in an initial public offering as early as Monday, seeking a valuation of about $5 billion, said two people familiar with the matter.
Lenta will seek to attract investors by promoting itself as Russia’s most profitable retailer, according to three people, who declined to be identified because the plans have not yet been made public. The company will disclose that earnings before interest, tax, depreciation and amortization as a proportion of sales were higher than the 11.2 percent margin of market leader OAO Magnit in 2013, two people said.
Lenta joins Metro AG’s Cash & Carry unit in a busy market for stock offerings in Russia, which researcher Euromonitor estimates will be Europe’s biggest retail market by 2018. Companies are riding the coattails of an economy whose expansion rate is set to accelerate to 2.5 percent this year from 1.4 percent in 2013, according the Economy Ministry.
Lenta plans to sell shares in London, with a possible secondary listing in Moscow, two other people familiar with the matter said earlier this month.
Shareholders including TPG and Russia’s VTB Capital are seeking to sell about $1 billion of stock, the people said. The company doesn’t plan to issue new shares, one person said.
Yana Mogileva, a Lenta spokeswoman in St. Petersburg, declined to comment on the company’s plans.
Lenta is one of the largest retail chains in Russia and the country’s second-largest hypermarket chain, according the the company’s Website. Founded in St. Petersburg in 1993, the company operates 77 hypermarkets in 45 cities across Russia and 10 supermarkets in the Moscow region. It plans to double its store network in three years.
Metro, Germany’s biggest retailer, confirmed Jan. 20 that it plans to proceed with a partial IPO of its Russian Cash & Carry unit in the first half of this year. Detsky Mir, the country’s largest retailer of children’s goods, selected Credit Suisse Group AG and JPMorgan Chase & Co. to help it sell shares later this year, people familiar with the matter have said.