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bne September 2018 Companies & Markets I 13
Russian petrochemical major Sibur reportedly preparing for IPO
Vadim Dumesh in Paris
Major Russian petrochemical holding Sibur plans to hold an IPO to raise $2bn-3bn based on a valuation of $20bn-$26bn, Reuters said on July 25 citing unnamed financial market sources.
A possible IPO could be a big test of the resistance of Russia's largest names to the mounting sanction pressure. Despite having sanctioned shareholders, Sibur placed a $500mn six- year Eurobond yielding 4.125% in September 2017, with the book for the bonds oversubscribed more than threefold.
Russia's largest petrochemical holding is controlled by Kremlin insiders Leonid Mikhelson (48.5%), Gennady Timchenko (17%), and Kirill Shamalov (3.9%). Shamalov is an ex-son-in-law of Russia's President Vladimir Putin, he and Timchenko are included in the US SDN-List.
The company could reportedly offer existing Sibur shares in Moscow and London by the end of the year. JP Morgan and Gazprombank are the organisers, but the IPO is likely to attract other runners due to the ambitious amount of the deal.
Sibur is a major international player and participates in state-led business negotiations. It is one of Russia’s most profitable large companies with earnings before interest, tax, depreciation and amortisation of $2.8bn in 2017 on
“Russia's largest petrochemical holding is controlled by Kremlin insiders”
an Ebitda margin of 35%, according to the Financial Times. The company operates 26 facilities across Russia and employs around 28,000 people.
In 2017 it started exporting liquefied petroleum gas supplies to China, in addition to existing rubber joint ventures with China Petroleum & Chemical Corp (Sinopec). Sinopec and Silk Road Fund bought 10% each in the Russian company.
Saudi Arabian Oil Co (Saudi Aramco) is reportedly also in
talks with Sibur eyeing a joint venture that would produce synthetic rubber in the Gulf kingdom.
The name of the company surfaced in the infamous 2017 Paradise Papers investigation, in connection with the shipping company Navigator that operated a lucrative partnership with Sibur.
“Shamalov increased his holding in Sibur in 2014 by borrowing $1.3bn from the state-controlled bank Gazprombank”
The Guardian claimed a link between Navigator and US Secretary of Commerce Wilbur Ross. The involvement of Ross in the shipping venture dates back to 2011, when Ross’s investment firm, WL Ross, began buying into Navigator with an investment that gave him two seats on the company’s board.
Separately Shamalov was promoted to be a Vice President of Sibur in 2012 and he was awarded a stake in the company at the same time.
Transporting liquefied gas from Sibur, Navigator went public in New York, with Ross more than doubling his money and reportedly boasting his investment was "a home run" before stepping down from Navigator's board in 2014.
While there is a link between Navigator and Sibur, the former only accounts for about 0.7% of Sibur’s overall logistical
costs according to company sources and is one of over 2000 similar contracts that the management have as part of its daily operations. The contact between the owners of Sibur and Navigator were minimal if there were any at all.
Shamalov increased his holding in Sibur in 2014 by borrowing $1.3bn from the state-controlled bank Gazprombank, where his brother Yury Shamalov is deputy chairman. He bought
the stake in Sibur from US-sanctioned stoligarch Gennady Timchenko, another close associate of Vladimir Putin.
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