Russian tycoon Tinkov may have accidentally killed his own IPO

By bne IntelliNews October 18, 2013

Ben Aris in Moscow -

Oleg Tinkov launched the IPO of his Russian online bank Tinkoff Credit Systems (TCS) this week, which has already garnered a lot of attention. But Tinkov himself might have inadvertently shot himself in the foot with an online gaffe that could mean the IPO ends up cancelled.

TCS' prospective shares are proving to be a hot item amongst investors. Reuters reported that only two days into the book building of potential buyers and the issue is already well oversubscribed. The price range of the London IPO has been set at $14.00 to $17.50 a global depositary receipt, valuing the lender at $2.6bn-3.2bn.

The bank, which has no branches and offers all its services online, hits many investors' hot buttons. It is probably Russia's most high-tech banking asset. It is incredibly profitable (no branches means low costs). And it is squarely in the sexy part of the consumer spectrum of young aspirational consumers who like to spend. This is one IPO Russian that won't fail due to lack of interest.

And it will net Tinkov a pretty penny. As enthusiasm for the IPO built, TCS increased its estimate for the amount to be raised from $750m to $870m. It is not clear exactly where all this money will go. Aton Capital analysts say some $150m-200m will go into the bank itself as capital. The rest will go to shareholders cashing out of parts of their stakes, which includes Goldman Sachs, Baring Vostok, Vostok Nafta and Horizon Capital. Tinkov himself is reportedly selling at least 10% of the bank in the IPO, Aton reports.

And then again, maybe not. An online gaffe by TInkov could see the IPO cancelled if the regulators decide to be strict about applying the rules.

On October 16, Forbes' Russian website ran a piece on the IPO. The article is a straight piece of reporting on the event, but down at the bottom amongst the readers' comments there is an item from one Oleg Tinkov.

• "We ask for a valuation of 7x P/B but this is irrelevant as we are not a bank but a high-tech company"

• "Our peers are traded at 14x 2014E P/E but we only ask for 12x, giving an IPO discount"

• "Western media is happy for us but it seems that Russians can't like each other for some reason"

Intrigued, Aton called Forbes to see if the name was legit - if the comments were from Tinkov himself.

"They confirmed it was not someone impersonating but indeed 'the' Oleg Tinkov himself," Ivan Kachkovski, financial analyst at Aton, said in a note. "What we saw was a major shareholder, who is in the process of selling some of his shares, publicly making statements on valuation and conjecturing on forward-looking earnings during the placement."

This is a big no-no. Shareholders who stand to materially benefit from a share offering are not allowed to go on record commenting on the prospects of their company during a "silent period" just before the floatation, for obvious reasons.

Tinkov's statements on multiples and pricing were quickly removed after only few hours, but the damage was done, says Aton. It is not clear what will happen now, if anything, as it depends on whether the regulators see this as a serious breach of the rules or not.

"We are certainly not lawyers and do not know the details, but we still feel that such an outburst in the West would potentially lead to certain fines being imposed on the parties involved and even possibly seeing the deal being called off. We will see if anyone cares to notice that in a Russian IPO," Kachkovski said in his note.

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