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9 February 2017
Guryev sells 4.5% of PJSC PhosAgro as investors warm to Russian stocks

Adorabella Ltd, a vehicle controlled by billionaire Andrey Guryev and his family, has sold a 4.5% stake in PhosAgro, the Russian maker of phosphate-based fertilizers, for Rb14.8bn ($250m) via an accelerated bookbuild on Wednesday night that was covered in an hour.

The deal comes as Russian ECM is enjoying something of a resurgence. Detsky Mir, the toy retailer, floated on the Moscow Exchange for Rb18.4bn this week, while Severstal PJSC, the steel producer, sold $250m of convertible bonds on Thursday.

“It was a good result,” said a banker on the deal. “It highlights that investors are warming up a bit more to Russia.”

“It’s encouraging that Detsky Mir worked and you’ve seen the demand pick up from interest in emerging markets and Russia,” said another banker in London.

Launched right after the market close, the block of 5.8m of PhosAgro’s Moscow-listed shares was covered an hour after launch. PhosAgro had closed at Rb2,700 on Wednesday, down 2.2% from the previous day’s close.

There was no price range at launch, although the leads had conducted a small wallcrossing exercise: “We had a good message at launch from a limited wallcrossing exercise, so that was helpful,” another banker on the deal said.

The books shut at 7.30pm and the block was priced at Rb2,550, a 5.6% discount to the closing price of PhosAgro on Wednesday, making the deal size Rb14.8bn.

“This is one of the lowest discounts for recent similar deals,” said Boris Kvasov, director, equity capital markets, at VTB Capital. “A substantial part of the deal was sold to international investors, including US, UK, European, Asian and Middle Eastern institutions.”

“It’s a lot of stock in an illiquid name so pricing that tight was a good result for the seller,” the second banker on the deal said. “It has traded down 5% or 6% for several hundred days of volume.”

Part of the proceeds will be used by the sellers to repurchase 3.5m shares, or 2.7% of the company, from Igor Antoshin, a member of the board of directors, at the same price as the block. The deal will cause PhosAgro’s freefloat to rise above 25%, which may lead to an increase in liquidity, as a result of increased stock weight in the MSCI and other indices. Adorabella continues to own 21.15% after the block and top-up.

Shares in PhosAgro closed at Rb2,522 on Thursday, down 6.6% from Wednesday’s close and below the offer price in the block. The company is dual-listed in London and Moscow and has a market cap of Rb326.5bn.

Corporate Communications VTB Capital