Aeroflot and Sovcomflot planning market listings in October

Aeroflot and Sovcomflot planning market listings in October
Photo: Konstantin 'KVentz' Ventslavovich

Long-delayed Initial Public Offering (IPO) of Russia’s key maritime shipping company Sovcomflot is due to take place in October. The country’s main air carrier, Aeroflot, also aims to raise funds next month through a secondary share offering. The money will serve to fight the economic fallout from the COVID-19 pandemic.

Aeroflot plans to open up its upcoming secondary share offering, which is part of state support for the country’s biggest airline, to private investors, reports Reuters citing sources close to the deal. The carrier showed a 36-billion-ruble ($481 million) loss in the second quarter, as air traffic reduced sharply due to the coronavirus pandemic.

The offering is expected in October after all paperwork is finished. Aeroflot is going to issue up to 1,7 billion new shares, which would increase the company’s total shares outstanding more than twice and represent 60% of its enlarged capital if issued in full. Russia intends to retain no less than its existing 51,2%, so the state plans to buy part of the new share issue. Russian Direct Investment Fund (RDIF) and VTB are also planning to take part in the deal, according to Reuters’ sources. Besides, Aeroflot wants to open the deal up to private investors to raise as much cash as possible.

The state is meant to remain Sovcomflot’s major shareholder after the IPO. Photo: Michael Volkov

Sovcomflot, Russia’s maritime shipping company specialising in petroleum and LNG shipping, also intends to raise funds in the near future. The company's IPO may occur in early October. “Sovcomflot’s strategy remains focused on maintaining our ‘preferred carrier’ status with the major oil and gas companies by renewing and expanding our fleet, with a particular focus on the industrial projects that have historically provided long term predictable cash flows and profitable returns on invested capital,” reads a statement by CEO Igor Tonkovidov. The carrier posted EBITDA of $1,03 billion in the 12 months from July 2019 to June 2020. In an effort to attract investors, the company plans to pay at least 50% of its 2020 net profit as dividends.

According to Reuters, the Russian government has considered listing the company for years as part of its broader privatisation plans. The state is meant to remain Sovcomflot’s major shareholder after the IPO. VTB Capital, Citigroup Global Markets Limited, Sberbank CIB, JPMorgan and BofA Securities will be joint global coordinators and book runners for the offering.

September has brought a revival to global IPO markets, although Europe has lagged behind the United States. In the latter, at least a dozen firms are expected to go public by the end of the month, which is the most since 2014.

By Anna Litvina