Russia's Phosagro eyes secondary share offering - sources

Thu Nov 22, 2012 3:04pm GMT

Quotes

   

* Readying sale of 10.8 pct stake

* GDR price of $14.50 could clear way for deal

* Company valued at $5 bln

By Douglas Busvine

MOSCOW, Nov 22 (Reuters) - Russian fertilizer firm Phosagro may go ahead with a secondary share offering before the year is out, making it easier for investors to trade its stock, sources familiar with the matter said.

The world's second-largest phosphate producer last month registered a secondary issue of shares equivalent to 10.8 percent of its equity. It is monitoring the performance of its London-traded proxy shares before launching subscriptions.

Phosagro, which floated its stock in London and Moscow last year, would launch a second placement if its global depositary receipts climb to around $14.50, one financial source said.

The company, controlled by billionaire Andrei Guriev, raised $538 million when it floated in July 2011 at $14 per GDR - the price at which the GDRs changed hands on Thursday having rallied from a low of $8.07 around the turn of the year.

Phosagro has an equity market value of around $5 billion and is often compared with U.S.-based phosphate market leader Mosaic . Last week it posted a 20 percent gain in nine-month earnings and announced a hefty interim dividend.

Top management has also been on the road meeting investors, with CEO Maxim Volkov telling Reuters in New York last month that Russia's recent accession to the World Trade Organization would be good for business.

Phosagro produces about 7.8 million tonnes of phosphate a year, out of the nearly 12 million tonnes produced in Russia.

QUICK DEAL?

One source confirmed a recent report in newspaper Kommersant that Guriev would subscribe to 13.5 million new shares and sell a similar number of his own shares, making it possible to do a "document-light" deal without an issue prospectus.

Applying a GDR price of $14.50 to the issue - three London-listed GDRs are equivalent to one ordinary share - would yield a valuation of slightly below $600 million.

Three banking sources said the offering could raise between $400 million and $500 million, however, reflecting the discount investors typically seek in large stock placements.

One source said the deal could take place within the next couple of weeks, while a second said it could happen after MegaFon, Russia's No. 2 mobile phone firm, prices a $2 billion IPO next week.

The company declined to comment, while some financial sources said a sale may not be imminent as markets mark a muted end to the year following Barack Obama's re-election as U.S. president.

Guriev, a former manager of jailed Russian oil tycoon Mikhail Khodorkovsky's Menatep bank, owns more than 70 percent of Phosagro. Khodorkovsky, the owner of defunct oil major Yukos, was jailed in 2005 for fraud and tax evasion.

Phosagro agreed in September to pay $344 million to buy a 20 percent stake in Apatit - a producer of apatite phosphate minerals that was once controlled by Khodorkovsky - from the Russian state, bringing its direct stake to 77.6 percent.

Phosagro has also moved to consolidate ownership of its operating assets.

The company has a free float of 11 percent, mainly traded on the London Stock Exchange, meaning that the amount of widely-held shares would roughly double should the sale take place.

Sources said Raiffeisen, Sberbank CIB and Credit Suisse were advising on the share offering. The banks declined to comment.