Russian cut-price goods retailer Fix Price considering London, Moscow IPO

MOSCOW: Russian cut-price retailer Fix Price said on Monday it was considering an initial public offering in London and Moscow of its global depositary receipts (GDRs) to capitalise on strong growth boosted by demand for inexpensive goods.

Fix Price, which sells low-priced goods in walk-in shops and online, has grown in popularity as the COVID-19 pandemic reduced many Russians' spending power.

It generated revenue of more than 190 billion roubles ($2.6 billion) in 2020, up 33% year-on-year, along with double-digit margins on earnings before interest, tax, depreciation and amortisation (EBITDA), Chief Executive Dmitry Kirsanov said.

It has now posted 16 consecutive quarters of double-digit like-for-like sales growth and plans to expand beyond the 78 Russian regions and some neighbouring countries where it already operates, he added.

Fix Price said BofA Securities, Citigroup, J.P. Morgan, Morgan Stanley and VTB Capital had been engaged to act as joint global coordinators and bookrunners, should the deal go ahead.

Financial market sources last month told Reuters the company might raise nearly $1 billion, mirroring Ozon, one of Russia's top online retailers, which listed its shares last November.

"The market conditions are pretty conducive to high-quality growth stories with solid returns, given the scarcity of such names in Russia," said Artur Galimov, consumer and retail analyst at Sova Capital.

Fix Price, controlled by Artem Khachatyran and Sergey Lomakin, each of whom hold around 42%, and with Goldman Sachs among its minority investors, said the offer would include GDRs from existing shareholders and members of senior management.

The GDRs would be admitted to trading both in London and Moscow, the company added, subject to market conditions.

Citing an independent industry consultant's report, Fix Price said Russia's variety value retail market was expected to triple in size by 2027.

The company reported adjusted EBITDA of 36.8 billion roubles for last year, up just over 35%.

In a presentation Fix Price said it would pay dividends semi-annually, with a target pay-out ratio of at least 50% of profit for the period calculated under international financial reporting standards.