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Lenta IPO Said Set to Raise $1 Billion as Price Range Narrowed

February 26, 2014

Lenta Ltd., the Russian hypermarket chain controlled by U.S. fund TPG Capital, is set to raise at least $1 billion for shareholders in an initial public offering in London after the low end of its price range was raised, according to two people with knowledge of the matter.

The price range was narrowed to $10 to $11 a depositary receipt yesterday, the people said, asking not to be identified as the information isn’t public. The book is covered at $10.50, they said. At that price, Lenta shareholders, including the European Bank for Reconstruction and Development and VTB Capital, will raise $1 billion, excluding an over-allotment option. It implies a market value of about $4.5 billion.

Lenta is one of at least three Russian retailers seeking to take advantage of a recovery in share sales, while London IPOs raised double the cash last year as in 2012. The Detsky Mir children’s goods chain is looking to list in London, and German retailer Metro AG’s Russian Cash & Carry unit plans to sell shares in the first half.

“Lenta picked a good moment to do an IPO, there’s lots of money in the markets,” Oleg Popov, who manages $1 billion of securities for Allianz Investments, said today by phone in Moscow. “There’s a lot of appetite for retailers. The banks managed to convince investors that hypermarkets are a good bet in Russia.”

‘Not Greedy’

OAO Magnit, Russia’s biggest food retailer, climbed 91 percent in Moscow last year, while OAO, the nation’s biggest electronics retailer, gained 24 percent. The Micex rose 2 percent. X5 Retail Group NV (FIVE), which is seeking to close a gap with its competitors, dropped 6 percent in London.

The IPO books close tomorrow, while Lenta is scheduled to start trading on Feb. 28, the terms sheet shows. The range was narrowed from $9.50 to $11.50 earlier.

JPMorgan Chase & Co., Credit Suisse Group AG, VTB Capital, Deutsche Bank, UBS AG and TPG Capital BD are managing the sale. The joint bookrunners were to be granted a 15 percent over-allotment option, according to Lenta.

“Lenta shareholders weren’t greedy and set a reasonable price range from the very beginning,” Yulia Bushueva, who helps manage $500 million at of Arbat Investment Services in Moscow, said by phone. “This tactic allowed it to draw interest to the IPO and price it above the bottom of the range even amid volatile markets.”

To contact the reporters on this story: Ruth David in London at; Ilya Khrennikov in Moscow at

To contact the editor responsible for this story: Kenneth Wong at

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