Russian hypermarket operator Lenta has raised $225 million selling new shares for expansion, as shoppers turn to low-cost food retailers amid slowing economic growth.
Retail chains offering economy formats are better positioned to compete for customers, as Russia heads for recession amid sanctions over Ukraine and lower oil prices, Fitch Ratings analyst Tatiana Bobrovskaya said in an emailed note on Tuesday. Lenta’s deal follows PAO Magnit’s share sale in February, which raised $143 million for Russia’s largest grocery chain.
“In this harsh credit environment, the placement should resolve the company’s financing issues and ensure that aggressive expansion plans get under way, while keeping its leverage within a reasonable range,” Sberbank CIB analysts Mikhail Krasnoperov and Artur Galimov said in an emailed note.
Lenta’s shares are up 9 per cent since the start of the year, compared with a 15-per-cent gain for the Micex Index. The rouble gained for a third day, climbing 0.4 per cent to 58.5090.
“This is a very good sign” for the Russian stock market, said Alexander Losev, chief executive officer at Sputnik Asset Management in Moscow. “It’s hard to imagine a better industry for the start of companies’ return to the capital market. Lenta is not a state-owned company, not a financial, not a commodity producer.”
Lenta plans to open at least 25 new hypermarkets this year and increase its revenue by 34 to 38 per cent, it said. Ulmart, Russia’s largest online retailer, plans to sell $1 billion of shares in an initial public offering in 2016 to fund expansion in the country’s e-commerce market.
News by Bloomberg, edited by ESM
