Domodedovo airport holds off on IPO plans

The largest airport in the Moscow Aviation Hub, Domodedovo, has postponed its Initial Public Offering on LSE due to low investors activity and unfavorable market conditions.

Denis Nuzhdin, Chief Executive Officer of the Company, believes that in the current market conditions the offering cannot be priced at a level which reflects a fair value of the Company.

“We appreciate the considerable interest that has been shown in our company since we announced our intention to float. However, we have decided not to start the roadshow and the book building process and to postpone the Offering as we were not satisfied that a fair valuation could be achieved in the current market conditions. DME has grown under our management from Moscow’s third largest airport in 1998 to the largest airport in Moscow in terms of both domestic and international air traffic, handling 22.3 million passengers in 2010, and we are committed to increasing the value of DME going forward. We may consider a public offering at another time in the future when market conditions improve.”

Domodedovo was planning to raise up to $1 billion through an offer of existing ordinary shares in the form of global depositary receipts to international institutional investors with the official roadshow expected on May, 30. Goldman Sachs, JP Morgan, Morgan Stanley and Citigroup were assigned as IPO bookrunners to organize pre-marketing of share trade.

Dmitry Adamidov, analyst at Investcafe, said Domodedovo Airport has been fairly estimated assuming low level of transparency

“I think the main reason why Domodedovo had to cancel its IPO lies in the fact that too many uncertain talks have been around one of the largest privately owned airport transparency and shareholders responsibilities. The company has never published its financial results to the public nor announced its strategic plans for development. The tension has been growing with airport-veiled financial results. Domodedovo could get a significant premium to the market if traded today on the market. According to Interfax information source, investors were not agreeing with the company valuation at $3-4 billion. However, we think that Domodedovo compared to company analogs on the market is worth $1.75-1.8 billion. The company can be estimated at much higher level if more financial and shareholder information is provided”