RusPetro pioneer IPO in 2012
The company placed a third of the company or about 120 million shares at $2.05 per share, which is at the bottom end of estimates. RusPetro had hoped to raise up to $350 million during the IPO and be valued at $1.2 billion, but the lower pricing makes that $700 million. Originally the company planned to go public in December, but choppy market conditions meant it took a longer time measuring investors interest.
One of the main RusPetro shareholders, Alexander Chistakov told Lenta.ru, that the company expected the share price to be higher, he thinks it is undervalued due to recent market fluctuation and instability.
RusPetro owns three deposits in western Siberia; the overall developed reserves are estimated at 2 billion barrels of oil with extraction volume of 4.5 thousand barrels a day. Half of the oil production is exported.
RusPetro will use $179 million of the proceeds from the float to develop existing operations and$45 million to pay down its debt to Sberbank, which owns about 5% of company’s shares.
Vitaliy Michalchuk analyst from Invetscafe believes, being an independent oil company, an IPO for Ruspetro is the only possible source of financing. “The current debt value would not let the company obtain funds via credits or bond issue”.
“In general the role of independent oil companies in the Russian market has been decreasing, down to 3% – a threefold decrease in the last 10 years. Many minor companies were acquired by the oil majors. For independent oil companies, in a stable financial situation, entering foreign markets via an IPO allows them to attract sufficient funds to acquire new license blocks and thus strengthen their resource base” says Vitaliy Michalchuk.
Chris Weafer, Chief Russia strategist at investment bank Troika Dialog told Reuters that the RusPetro IPO "shows there is still an appetite for issues if the valuation is low enough, or if the opportunity is unique or specialist. Market conditions for big IPOs remain very difficult. They will still have to wait until the second half of 2012 or accept a low valuation".