Page 112 - RusRPTApr19

creditors of the company now filing for its bankruptcy include Russia's largest bank Sberbank. The chain is owned by Krasnodar businessman Dmitry Sherbankov, who owned at least 80% in Sangi in 2015. Most of the outlets of the company are currently closed and are likely to be taken over by competitors such as Magnit. One of Russia's largest retailers, in the end of 2018 Magnit unveiled aggressive store growth targets, planning to increase the number of cosmetics stores by 4,000 to 9,300 stores in 2023, along with boosting the number of proximity stores to 22,800 from 13,000 currently, Magnit family stores to 900 from 500, and other formats by 9,000.
Severgroup of Russian steel tycoon Alexei Mordashov is looking to buy a stake in Russia’s second tier retailer, hypermarket chain Lenta, Vedomosti daily reported on March 27. Reportedly, the stake of Lenta's largest shareholder TPG Group of 34.13% could be acquired. No other details were disclosed at that point. Lenta commented to Vedomosti and Reuters that any agreement would be conditioned by a mandatory buyout offer to all shareholders of the retailer's GDRs. After an IPO in 2014 Lenta has a freefloat of 57.22% on London Stock Exchange. At the time of the IPO, just before the sanction crisis broke out between Russia and the West, the GDRs were placed at $10 making a market capitalisation of $4.3bn. Currently the price is at about $3.3 and TPGs stake could be valued at $547mn. Mordashov does not have large retail assets in his portfolio. Previously it was reported that Severgroup was looking to buy into Russia's second-largest retailer Magnit.
The European Bank for Reconstruction and Development (EBRD) can sell a 7.4% stake in retailer Lenta to Severgroup of Alexei Mordashov, business daily Kommersant reported on March 28, citing an industry source. Lenta’s largest shareholders are TPG Group which owns 34.13% and EBRD with 7.4%, free float of the company is 57.22%. On Wednesday, Lenta confirmed negotiations between TPG Group and Severgroup on stake sale.
Russian electronics retailers M.Video-Eldorado will see RUB380bn ($6bn) of sales in 2019, growing by 7.65%, slowing two-fold from 15.7% top line growth seen in 2018, Vedomosti daily said on March 21 citing the company's presentation. M.Video completed a mega-merger with rival Eldorado in March 2018 to form the biggest consumer electronics retail chain in Russia, and a top ten European player, as bne IntelliNews detailed in an exclusive interview at the time. Its German rival electronics retailer MediaMarktSaturn, owned by the German Ceconomy that had invested heavily into Russia, conceded defeat and was also brought into the merged entity in June the same year. Despite the slowdown forecasted for 2019, M.Video still expects to beat the market that is seen to grow by 5%. The retailer believes that in 2018 many consumers were renewing the electronics bought 4-5 years ago ahead of 2014 ruble crash, and now expects a slower sales cycle until the next renewal wave. Additional revenue sources for M.Video will include developing Media Markt and other new stores, online sales, and further business digitisation. Under IFRS for 2018 overall M.Video-Eldorado made RUB8.37bn of net profit (up by 20.3%) with Ebitda soaring 76% to RUB20.75bn at a margin of 6.5% (up by 50bp year-on-year).
The iconic Russian children's goods chain Detsky Mir controlled by AFK Sistema multi-industry investment conglomerate posted 14% year-on- year growth in revenues in the 4Q18, supported by 89% y/y expansion of online sales that accounted for 8% of total top line. Detsky Mir posted 18% y/y Ebitda growth in the reporting quarter, with 2018 Ebitda doubling year-on-year,
112 RUSSIA Country Report April 2019 www.intellinews.com