Book building for participation in IPO of Sovcomflot starts

AK&M 01 October 2020 20:01

Investment company VELES Capital has started accepting applications for participation in the initial public offering (IPO) of state-owned shipping company Sovcomflot. The IPO price range is RUB 105-117 per common share, the investment company informed.

About $500 million are expected to be raised during the IPO for new industrial projects, decarbonization and further deleveraging.

The IPO is arranged by VTB Capital, Citigroup Global Markets Limited, Sberbank CIB, J.P. Morgan and BofA Securities, ING Bank.

The book building will be completed on October 6, 2020. Trading in Sovcomflot's common shares on the Moscow Exchange (listing level 1) is expected to start on October 7 under the FLOT ticker (ISIN: RU000A0JXNU8).

Sovcomflot is a state-owned company focusing on transporting energy resources, operating tankers and ice-class vessels, providing logistics services to support offshore field development and port activities, serving major oil and gas projects in Russia and worldwide, including Sakhalin-1, Sakhalin-2, Prirazlomnoye, Novy Port, Yamal LNG, and others. The company's fleet consists of 147 vessels, with 23 more vessels in the pipeline (planned for delivery before 2025. The fleet has a market value of $5.6 billion.

Sovcomflot's EBITDA totaled $823 million in 2019, $1.028 billion for the 12 months ended June 30, 2020 (steady growth since 2017). the company's net debt to adjusted EBITDA ratio is 2.7x. Sovcomflot earns 100% of its revenues in US dollars. The company plans to pay at least 50% of its IFRS net profit in dividends. In 2020, the dividend yield is projected at approximately 6% in terms of US dollars (depending on the final offering price). The business has a high growth potential: Sovcomflot will transport most of the liquefied natural gas abroad, with LNG exports potentially growing 3 times by 2030, according to the company's estimates.