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UPDATE 2-Russia's KOKS eyes $500 mln from IPO-sources

Published 01/12/2011, 06:15 AM
Updated 01/12/2011, 06:20 AM

* Plans to list shares in London and Moscow - company

* Hopes to raise $500 million, pricing early Feb - sources

* Deal will represent sale of 20-25 pct of group - source

* Coking coal prices set to rise in short term - analysts

* Citi, UBS, VTB Capital are joint bookrunners

(Adds analyst comment, background, detail)

By John Bowker and Kylie MacLellan

MOSCOW/LONDON, Jan 12 (Reuters) - Russian coking coal and pig iron group KOKS is planning an initial public offering of its shares in Moscow and London, which three sources close to the deal said was expected to raise around $500 million.

The Sibepia-based company, the world's biggest exporter of core steel ingredient pig iron, will offer between 20 and 25 percent of its equity and will price the shares in early February, one source close to the deal said.

Plans for the IPO come on the back of flotation plans by Russian pump manufacturer HMS Hydraulic, which said earlier this week it aimed to raise $500 million in London.

The deals could help kick-start a potentially bumper year for Russian IPOs. After two barren years, new share issues rebounded in 2010 with companies raising around $5.5 billion.

Analysts have said Russian private issuers could raise up to $30 billion this year given the right market conditions. As IPOs increase globally, companies in emerging markets and resources sectors are tipped by analysts to enjoy the most success.

Analysts said the timing of the KOKS IPO was well chosen, partly as recent flooding in coal-producing Australia is likely to push up prices of coking coal.

"The timing of the KOKS IPO has been picked well," Uralsib analyst Slava Smolyaninov said.

"The flooding in Australia ... comes in handy as it raises coal prices, which is a serious factor for the share price placement," Smolyaninov said, noting coking coal prices had tripled during comparable Australian flooding in 2008.

KOKS said in a statement it would use the proceeds of the deal to fund its investment programme.

"The proposed IPO ... will enable us to increase the level of self-sufficiency in obtaining key raw materials and achieve future growth," Chairman Evgeniy Zubitskiy said in a statement.

The company is owned by Zubitskiy, his brother Andrey and resources tycoon father Boris. It had 115 and 284 million tonnes of coking coal and iron ore reserves respectively as of September 2010, the company said in the statement.

Its earnings before interest, tax, depreciation and amortisation (EBITDA) came in at 4.6 billion roubles ($150.5 million) in 2009 on revenue of nearly 27 billion roubles.

The company said it would list ordinary shares in Moscow and secondary global depository receipts (GDRs) in London. Citi, UBS and VTB Capital are joint bookrunners for the offering. (Additional reporting by Nastassia Astrasheuskaya, Oksana Kobzeva and Alfred Kueppers in Moscow; Editing by Hans Peters and David Holmes) ($1=30.57 Rouble)

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