Discounted HMS IPO provides development funding

Russian pump manufacturer HMS Hydraulic Machines & Systems has raised $360 million after cutting the price and size of its IPO in London.

­The company had to revaluate its business and offer lower price per share due to low investor interest.  Initially, the planned offer was for 47 million shares, but only 43 million were sold and at a 15% discount to the original range of $9.25 to $12 per share planned in January, which was intended to raise $437-567 million.

However a lack of interest saw the company conduct a secondary evaluation estimating company at $996 million against previous evaluation of $1.084-1.406 billion.

Executive Director Artem Molchanov, said that he was positive about the outcome saying that the funding will provide more development opportunities, with accelerating demand for gas equipment in Russia and CIS driven by pipeline projects.

Andrew Tretelnikov analyst Rye, Man & Gor Securities, says that HMS was originally overpriced.

“While evaluating the cost of the business HMS was counting on the long-term growth prospects of the market of gas equipment. According to the investment memorandum HMS forecasted three times market growth by 2015 in terms of capital. But the outlook is quite dubious, so investors decided to buy shares at the lower end of the range.”