Qiwi Plc’s (QIWI) planned $403 million secondary share sale is the first major equity offering by a Russian company since President Vladimir Putin’s incursion into Ukraine triggered a rout in the stock market.
American depositary receipts of Qiwi sank 7.6 percent in New York June 10 after it announced the sale. The operator of payment terminals, which has surged 65 percent since an April low, said it may use the proceeds for acquisitions. The Bloomberg index of the most-traded Russian companies in the U.S. advanced yesterday as OAO Gazprom gained while Qiwi rebounded 1.5 percent. Russian markets are closed for a holiday today.
There hasn’t been a completed share sale by a Russian company since February, when retailer Lenta Ltd.’s (LNTA) initial public offering in London raised $952 million, according to data compiled by Bloomberg. Investor demand for Russian assets dried up after Putin annexed Ukraine’s Crimea region in March. Tension between the two countries has calmed in recent weeks, with the head of the Organization for Security and Cooperation in Europe saying June 10 that peace talks are progressing.
“Now the door is open again as international investors believe that the conflict in Ukraine won’t escalate and a compromise of some sort is likely after a new president was elected in Kiev,” Kingsmill Bond, Moscow-based chief strategist at Sberbank, said by phone yesterday.
Billionaire Alisher Usmanov’s Mail.ru Group Ltd. (MAIL) will be selling stock in the offering as will Qiwi Chairman Boris Kim and other early investors, according to a prospectus filed June 9. A total of 7.97 million American depositary shares will be sold. Chief Executive Officer Sergey Solonin isn’t among the selling shareholders, Varvara Kiseleva, Qiwi’s investor relations officer, said by e-mail.
“The market has recovered and they try take advantage of this window,” Ian Hague, founding partner of New York-based Firebird Management LLC, which manages $1.1 billion of assets including Russian stocks, said by phone yesterday.
The Cyprus-based company, which operates an online wallet service co-branded with Visa Inc. (V), said in the filing that it may use the proceeds from the sale for mergers and acquisitions.
“The situation in Ukraine and the U.S., EU and other sanctions that have been imposed could adversely impact our operations and financial condition,” Qiwi said in the filing. Sanctions by the U.S. and the European Union include travel bans and asset freezes for Putin allies.
Credit Suisse Group AG (CSGN) and VTB Capital will manage the sale along with William Blair & Co. and Atonline Ltd.
Qiwi spokeswoman Yuliya Mansurova declined to comment yesterday when asked about the share sale.
Billionaire Vladimir Evtushenkov’s children-goods retailer Detsky Mir Group postponed a planned London share sale because of tension over Crimea, people familiar with the matter said March 13. German retailer Metro AG (MEO) said the same month it would delay the IPO of its Russian Cash & Carry business due to market turmoil.
After raising $213 million in May 2013, Qiwi sold $288 million in a September offering. The company’s net income will surge 31 percent to 2.8 billion rubles ($82.8 million) this year, according to the average of nine analyst estimates compiled by Bloomberg.
The Bloomberg Russia-US Equity Index gained 0.5 percent to 93.12 and futures on the RTS Index added 0.6 percent to 137,110 in U.S. hours. Qiwi closed at $44.29.
Gazprom advanced 1.1 percent to $8.52. OAO Surgutneftegas climbed 2 percent to a seven-year high of $8.18 and OAO Lukoil rose 1.9 percent to $61, the highest since Jan. 3.
Gazprom moved its deadline for Ukraine’s gas debt repayment for a third time this month, giving the EU, which depends on Russian gas supplies via Ukraine for about 15 percent of its shipments, more time to help reach an agreement. EU Energy Commissioner Guenther Oettinger said yesterday that the parties “will try to make progress” in the next 48 hours.
Brent oil climbed as fighters from a breakaway al-Qaeda group are in position to seize Iraqi energy infrastructure after taking control of Mosul. Oil is Russia’s top export and along with natural gas contributes about half its budget revenue.
The Market Vectors Russia ETF (RSX), the biggest U.S. exchange-traded fund that holds Russian shares, rose 0.6 percent to $26.66. The RTS Volatility Index, which measures expected swings in futures, added 2.6 percent to 25.88.