Sistema president outlines plans for two further IPOs

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The billionaire head of Sistema, the Russian conglomerate, outlined plans for two further initial public offerings of company subsidiaries this year, on a day when two other Russian businesses raised a combined $1.6bn in the London market.

Comstar, also a Sistema subsidiary, on Tuesday raised $1.06bn, one of the largest London listings by a Russian company and second only to the $1.56bn raised by Sistema itself a year ago.

Meanwhile, Trader Media East, comprising the Russian and eastern European parts of the Trader Classified Media group, which owns print and online classified titles, raised about $565m.

Vladimir Yevtushenkov, Sistema president, said in an interview that Sistema Hals, its 100 per cent owned commercial property arm, was planning an IPO in London through Morgan Stanley, possibly in November. If there was time before the end of the year, Sistema was also planning an IPO through Nasdaq of shares in its 78 per cent owned Sitronics subsidiary, he said.

Nasdaq would be preferred over London for Sitronics because of the higher valuations the US market offered for technology companies, he said. But most Russian companies have chosen London over New York, and they have been the biggest source of listings by foreign companies on the London exchange in the past year. Russian companies and those from other former Soviet states raised about $5bn in London’s main market in 2005.

Shares of Comstar and Trader Media East are due to begin official trading on Monday. However, both stocks fell in the “when issued” market, raising questions over whether they had been too aggressively priced. Comstar’s Global Depositary Receipts were priced in the middle of initial guidance at $7.25 each, valuing the company at just over $3bn, and Trader Media East GDRs at $13, valuing the company at about $650m.

Richard Segal, chief strategist at Argo Capital, a hedge fund, said of the Comstar IPO: “I don’t think a slight wobble in an IPO is going to hurt Sistema’s reputation. But if there is going to be another IPO relatively soon, the pricing relative to expectations is something they are going to have to take into consideration.”

Sistema Hals reported an operating profit of $23.5m in 2004 on revenues of $300.1m.

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