Russian Helicopters IPO to lift off on $500 million investor exposure
Russian Helicopters has applied for its shares to be listed on Russia's RTS and MICEX stock exchanges as well as GDR’s listed in London, saying it will use the proceeds to pay off existing debts and fund expansion.
"The company currently plans to use the net proceeds from the offering to pay off existing debt and to fund certain mandatory tender offers for shares in its subsidiaries which it does not already own.”
Russian Helicopters CEO, Dmitry Petrov, told Business RT that he saw the listing move as heralding a far larger prominence for the company on global helicopter markets.
“Currently, we are growing faster than our competitors and we are not afraid such competition. Already last year, we successfully entered into the Latin American and African markets. One of our main goals is to cement our position among the top 3 leading helicopter producers in the world.”
Petrov added that the proceeds would be devoted towards penetrating new markets, servicing clients, and ensuring helicopter design and production in Russia.
"While we have already achieved leading positions in some of the most attractive and highest-growth market segments of the world's helicopter industry, the IPO will help us to increase further our global market share and to continue to meet the needs of our customers around the world.”
The company says the listing will consist mainly of shares of existing majority shareholder Oboronprom, with one share to equal one GDR, with the total value expected to exceed $500 million.
"The offering is expected to consist of the sale of existing shares (including in the form of GDRs) primarily by the company's major shareholder, Oboronprom, as well as up to $250 million of primary shares in the form of GDRs,"
Russian Helicopters consists of eleven enterprises including the Mil and Kamov design bureaus and the Kazan Helicopter Plant, and produces the globally respected Mi-17 and Mi-171. The firm is one of the most productive parts of Russia’s aerospace sector, with buoyant sales to China, India, and other Asian countries.
The Russian market is also set to lift off, with major orders planned for the Russian military, which needs to replace hundreds of Mi-8s and introduce new attack and training helicopters such as the Mi-28N and Ansat. Russia and the United States agreed in April on a $370 million deal to supply 21 Mi-17 helicopters worth to Afghanistan.
Alexandra Lozovaya, deputy chief of analysis at InvestCafe, believes the prominence the company has already achieved in the helicopter market will make it very attractive for global investors who have had limited opportunities to access investment into Russian aerospace.
“Funds from the placement will be used for refinancing debt and repurchasing minority shareholders’ stock. I expect the placement will be successful due to the firm’s unique position in the sector. Previously, the United Aircraft Corporation was the only major issuer of aircraft sector on the Russian stock exchange.”
Bank of Moscow analyst, Mikhail Lyamin, also highlighted the paucity of investor exposure to Russian aerospace, and the attraction that Russian Helicopters could have.
“The company has an important advantage on the market as long as it is the only aircraft company from the Russian market listing its shares since Irkutsk stepped onto the Russian stock exchange. Russian Helicopters is unique, and the company is likely to attract funds, with major interest from Western investors and big funds. Russian Fund and portfolio investors are definitely positive about the company’s plans. There are no alternatives on the Russian market which puts the company at the top of the list for investors looking at Russia and this sector of the market.”
Lozovaya added that the company will complete its buyout of minority stakes in smaller helicopter design and production bureaux.
“Russian Helicopters has finished a process of consolidation and is looking to take 100% control in three major manufacturers, Ulan-Udinsky aircraft factory, Kazan Helicopter Plant” and Rostvertol, by increasing its share 75% to 100%.”
The Bank of Moscow’s Mikhail Lyamin, says the listing is likely to see Russian Helicopters valued at about $1.6 billion.
“According to simple expert calculations prior to official results the company could be worth $1.6 billion concerning the placement of 30% of shares in order to attract $500 million. The company may hold an extra issue of shares to increase its stake in three major manufacturers. However, this process should be accomplished before the actual listing.”