Russian paper and timber major Segezha Group has announced its anticipated initial public offering (IPO) on the Moscow Exchange, aiming to raise at least RUB30bn ($0.4bn) by issuing new shares, in line with previous reports.

Multi-industry investment conglomerate AFK Sistema will remain a major shareholder in Segezha, with an over-allotment option of secondary shares of up to 15% of the shares offered in the IPO.

As followed by bne IntelliNews, the IPO of Segezha was expected to be the main short-term catalyst for Sistema, after it posted solid 4Q20 IFRS results.

In the past few months Sistema has seen a number of other powerful catalysts, such as the sale of its stake in Detsky Mir children's goods retailer, the IPO of major e-commerce player Ozon and consolidation of biotech assets. 

On April 12 Segezha said in a separate press release that it aims to pay dividends of between RUB3bn and RUB5.5bn each year from 2021 to 2023. Starting from 2024, dividend distributions are expected to be based on adjusted free cash flow (FCF), with a 75%-100% payout stipulated in the dividend policy and "potentially higher payouts in case of stronger markets and/or leverage headroom."

"This is a nice catalyst for Sistema shares," BCS Global Markets commented on April 13, while noting that the IPO would crystallise Segezha’s value (current estimate of $1.3bn equity value pre-money) and some extra cash for Sistema. 

BCS GM analysts anticipate the IPO shortly, unless deterred by geopolitical risks, and affirm a Buy rating for AFK Sistema's shares.

As detailed in Segezha's recent company profile by bne IntelliNews, with the attention slowly returning to the climate crisis, Russia’s wood processing and timber business is coming back into focus.

Segezha Group showed IFRS revenue growth of 18% year on year to RUB69bn ($0.9bn) in 2020, OIBDA growth of 24.5% y/y to RUB17.5bn, making a 25% margin, up by 1.3 percentage points y/y.