However, before that the company will be made open for investors turning into a public corporation.
Russian diamond miner ALROSA, De Beers’ major rival, may venture an IPO as near as 2012 preceding it with an in-between move to turn the company into a public joint stock entity that would open the traditionally closed diamond industry to outside investors, www.rb.ru says citing the Financial Times.
ALROSA, controlled by Russia’s federal and regional governments (for details, please read below), has long been the second-largest producer of diamonds behind De Beers. In 2009, the two companies mined half of the world’s diamonds (measured by carat volume). Both companies are private, limiting opportunities for investors.
However, Fyodor Andreev, ALROSA’s chief executive, has said this would change next year, the Financial Times writes. The Siberia-based miner is converting itself from a closed to an open joint stock company.
“The conversion process is the decision of our shareholders,” Mr. Andreev told the Financial Times. “It will give ALROSA an opportunity to raise investment on the market if we need it in the future.”
Andrey Polyakov, the company’s head of communications, said that ALROSA is going to be the first ‘open’ big diamond mining company. According to him, the transition to an OAO should be completed in the second quarter of 2011 and so far it is too early to talk about an IPO.
But the decision to abandon ZAO status has been read by diamond analysts as a precursor to a listing in either London or Hong Kong in 2012, the Financial Times says.
Foregone conclusion
In 2009, ALROSA accounted for 29% of the world’s diamond output. Last November, Yakutia’s parliament approved the company’s transformation into an open joint stock corporation. The representatives of this republic sitting on ALROSA’s Supervisory Board have the right to dispose of the regional block of shares at their own discretion on condition it will not exceed 25% +1 share. Currently, Yakutia owns 32% of shares with another 8% held by the republic’s districts (uluses), while Russia’s federal government owns 50.9% and minority shareholders have the remaining 9%.
After transformation ALROSA may carry out an additional emission of shares. In early October, Mr. Andreev said the emission may run at $2 billion or 20% of ALROSA’s value. The company intends to use raised money to complete the construction of its underground mines.
After being turned public ALROSA may venture an IPO in 2012-2013 depending on its need in capital and the situation on the world’s markets, Maxim Lobada, an analyst of Investcafe, told www.rb.ru. According to him, ALROSA may launch an IPO both in Hong Kong and London trying to attract international capital. “So far it is early to speak of the placing price, but according to a preliminary estimate, an additional emission of 25% of shares will make the price run at $30,330 per share (if not split-up),” the expert says.
