icon bookmark-bicon bookmarkicon cameraicon checkicon chevron downicon chevron lefticon chevron righticon chevron upicon closeicon v-compressicon downloadicon editicon v-expandicon fbicon fileicon filtericon flag ruicon full chevron downicon full chevron lefticon full chevron righticon full chevron upicon gpicon insicon mailicon moveicon-musicicon mutedicon nomutedicon okicon v-pauseicon v-playicon searchicon shareicon sign inicon sign upicon stepbackicon stepforicon swipe downicon tagicon tagsicon tgicon trashicon twicon vkicon yticon wticon fm

Alrosa clearing decks for IPO

Russia’s top world diamond producer, Alrosa, could launch an IPO in the next few years. The company is currently trying to sell non core assets and attract investment with a Eurobond issuing strategy.

The company sees a Eurobond issue as more attractive in terms of duration and cost, while the local bond market seems to be out of reach according to Igor Kulichik, Financial Director Alrosa

“Nowadays a 10 year rouble bond issuing is impossible and the external markets are more financially attractive to us. The company long-term plans are to reduce its loan debt portfolio and increase borrowing period.”

Along with debt restructuring Alrosa plans to conduct an IPO in 2011-2012, after it is converted from a closed joint stock company into an open one. Kulichik said the conversion of Alrosa into an OJSC will require amendments to legislation in Yakutia, where the company is based. He also added that the proceeds from the IPO will be used to expand diamond production

“Today we’ve come to realize that IPO is an important instrument for capital inflows from company investors, which can drive a progressive development and resource base expansion. Moreover, sale of 20-30% of company shares will keep the company under the control of the government. However, to succeed with an IPO we still have to manage the production and financial economy leading to a several political and economical decisions. I believe if today we start the preparation process, by 2012 we will be able to arrange an IPO.”

Investment bank J.P. Morgan values the company at up to $9 BILLION.

Marat Gabitov Metals and mining analyst, at Unicredit Securities expects the demand for diamonds to grow on the global market with appetite from China overtaking U.S. consumers.

“Demand is likely to grow because diamonds are kind of a luxury product and if you look at China right now, this year we already saw that China was the biggest market for luxury cars, for example, and I believe strongly that China will overtake the US as the biggest market for diamonds. Currently US accounts for over 50% of the world diamond market. I think shortly China could replace it and there will be enough demand.”

Dear readers and commenters,

We have implemented a new engine for our comment section. We hope the transition goes smoothly for all of you. Unfortunately, the comments made before the change have been lost due to a technical problem. We are working on restoring them, and hoping to see you fill up the comment section with new ones. You should still be able to log in to comment using your social-media profiles, but if you signed up under an RT profile before, you are invited to create a new profile with the new commenting system.

Sorry for the inconvenience, and looking forward to your future comments,

RT Team.