The world’s biggest diamond producer Alrosa, could be on the verge of an IPO this year raising up to $1 billion. The company has refused to comment but details of an October share offering have appeared in a number of Russian newspapers.
The main shareholders, the Russian state and the Yakutia republic in the Russian Far East will each sell 7% of the company. Kommersant Daily reports the banks overseeing the deal say that will be enough to create good liquidity in the market.
The supervisory board of the state owned company may approve the privatization plan at a meeting next week.
Some of the company’s shares are currently traded on the RTS-board – a system dealing with non-listed stock. The company is likely to go public on the Russian MICEX-RTS in autumn 2012 or spring 2013.
“The company is in no hurry to attract money from the market, but, probably an IPO from Alrosa is a question of privatization trend in Russia overall”, says Yury Volov from Nomos Bank.
Mr. Volov agrees that the size of the offering is likely to be around $1-1.5 billion. “It will give Alrosa free flow compared to other Russian metals’ and mining’s stocks. Usually after the public offering companies become more transparent, more, say friendly to the public overall and investors in particular. In terms of business development I don’t think that the offering will change a lot”, he adds.
Alrosa accounts for approximately 25% of the world's rough diamond supply and 97% of Russia's rough diamond production. In the first nine months of 2011 the company mined about 26 million carats of diamonds and showed a net profit of over $1 billion.