Russian diamond major Alrosa plans IPO in fall.

By bne IntelliNews May 17, 2013

Russian diamond major Alrosa plans IPO on MICEX in October-November 2013, however, the decision of the government is still required, head of the company Fyodor Andreev told the press. He confirmed previous reports that 14% of the company is going to be offered.

Previously in February state property agency RosImushestvo announced that at least USD 1bn are planned to be raised from an IPO of 14% of Alrosa on MICEX in the nearest future. President of Republic of Sakha (Yakutia) Yegor Borisov then announced that privatizing a 14% state in diamond major Alrosa should take place in Q3/13-Q4/13. In October EconMin estimated that RUB 12bn-RUB 24bn (USD 392mn-USD 784mn) could be raised from selling a 7%-14% stake in the company.

The state holds about 51% of the shares, out of which 38% belong to the list of strategic assets which leaves the rest that could be privatized. Another 40% are held by Yakut republic and its local municipalities. Russian federal government and the government of Yakut republic previously were expected to offer 7% of the shares each on MICEX.

In 2012 the IFRS net profit of diamond major Alrosa grew by 26% y/y to RUB 33.6bn (USD 1.08bn), the company reported. The company's revenue went up by 10% y/y to record-high RUB 150.9bn, attributed to stable prices and demand on diamonds. EBITDA declined by 5% y/y to RUB 61.95bn at a margin of 41% in 2012 vs. 47% in 2011. Alrosa’s closest global competitor De Beers decreased 2012 revenues by 16% y/y to USD 6bn, Reuters reminds.

Alrosa’s capital investment in 2012 went up by 40% y/y to RUB 30bn due to doubling investment growth into new production facilities. Company’s net debt to EBITDA as of end of 2012 went up to 1.9 vs. 1.3 as of end of 2011. Dividends for 2012 will be increased by 10% to 24% of IFRS net profit or RUB 8.2bn.

Alrosa accounts for 99% of Russian and about 30% of global diamond output. In March 2012 Alrosa placed more than USD 1bn worth of Eurobonds in three tranches. USD 725mn of 12-months bonds yielding 4.125% and USD 315mn nine-year bonds yielding 4.25% issues were followed up by an additional USD 260mn seven-month issue yielding 3.75% capitalizing on high demand.      

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