Copies of this announcement are not being made and may not be distributed or sent, directly or indirectly, into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Canada, Australia or Japan.
This announcement is not and does not form part of any offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein are not registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. PJSC Detsky mir does not intend to register any portion of the offering of any securities referred to herein in the United States or to conduct a public offering of the securities in the United States.
This communication does not constitute an offer of the securities to the public in the United Kingdom. No prospectus has been or will be approved in the United Kingdom in respect of the securities. This communication is being distributed to and is directed only at (i) persons who are outside the United Kingdom; (ii) persons who are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended from time to time (the "Order"); (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order; (iv) certified high net worth individuals and certified and self-certified sophisticated investors as described in Articles 48, 50 and 50A, respectively of the Order; and (v) persons to whom this communication may otherwise be lawfully communicated (all such persons together being referred to as "Relevant Persons"). Any investment activity to which this communication relates will only be available to and will only be engaged with, Relevant Persons. Any person who is not a Relevant Person should not act or rely on this document or any of its contents.
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DETSKY MIR PRICES INITIAL PUBLIC OFFERING AT RUB 85 PER SHARE
Moscow, Russia - 8 February 201 7. Public Joint Stock Company "Detsky mir" (the "Company" and, together with its subsidiaries, the "Group" or "Detsky Mir"), Russia's largest specialised children's goods retailer, today announced the pricing of its initial public offering (the "Offering") of its ordinary shares (the "Shares") on Moscow Exchange.
HIGHLIGHTS
- The offer price has been set at RUB 85 per Share.
- The total size of the Offering is approximately RUB 21.1 billion, including the over-allotment option, or RUB 18.4 billion, excluding the over-allotment option.
- The Offering implies a market capitalisation at the commencement of dealings of approximately RUB 62.8 billion.
- The Shares have been admitted to trading in Level 1 of the List of Securities Admitted to Trading on Moscow Exchange. Trading is expected to commence on 10 February 2017 under the ticker "DSKY".
- The Offering consists of a sale by existing shareholders (the "Selling Shareholders") of 247,912,160 Shares, or 33.55% of the Company's existing share capital, including the over-allotment option or 216,514,669 Shares, representing 29.30% of the Company's existing share capital, excluding the over-allotment option.
- The Selling Shareholders are:
- PJSFC Sistema ("Sistema") owned a 72.57% stake immediately before the Offering, and sold 145,055,738 Shares, representing approximately 19.63% of the Company's share capital, with the possibility to increase the number of Shares sold to a total of 166,814,099 (representing approximately 22.57% of the Company's share capital) in the event that the over-allotment option is exercised. As a result of the Offering Sistema will retain a stake in Detsky Mir of at least 50% +1 share.
- Russia-China Investment Fund ("RCIF", established by the Russian Direct Investment Fund (RDIF) and the China Investment Corporation (CIC)) owned via its investment vehicles Floette Holdings Limited and Exarzo Holdings Limited a 23.10% stake immediately before the Offering, and sold 64,260,870 Shares, representing 8.70% of the Company's share capital, with the possibility to increase the number of Shares sold to a total of 73,900,000 (representing approximately 10.00% of the Company's share capital) in the event that the over-allotment option is exercised. As a result of the Offering RCIF will retain a stake in Detsky Mir of at least 13.10%.
- Certain individual shareholders, including members of the management teams of the Company and Sistema, collectively owned a 4.33% stake immediately before the Offering, and sold 7,198,061 Shares, representing approximately 0.97% of the Company's share capital. As a result of the Offering the individual shareholders will collectively retain a stake in Detsky Mir of 3.35%.
- In connection with the Offering, Sistema, Floette Holdings Limited and Exarzo Holdings Limited have granted to the Joint Bookrunners an over-allotment option to purchase Shares representing up to 15% of the Shares sold by them in the Offering at the offer price.
- In connection with the Offering, Goldman Sachs, acting as stabilising manager, will have the right, during a period of up to 30 calendar days from the date hereof, to purchase from the market, for stabilisation purposes, up to 31,397,491 Shares.
- There will be a lock-up period of 365 days for the management of the Company and 180 days for the other Selling Shareholders and the Company.
- Credit Suisse, Goldman Sachs International and Morgan Stanley are acting as Joint Global Coordinators and Joint Bookrunners. Sberbank CIB and UBS Investment Bank are acting as Joint Bookrunners.
Vladimir Chirakhov, CEO of Detsky Mir , said:
"We are delighted by the strong market interest in our offering, and are pleased now to move forward with a high-quality and geographically diverse shareholder base. The IPO caps off an extremely successful year for Detsky Mir. We expect our financial results for 2016 to be the strongest in the Company's history and we will continue to grow the business and further expand our market share, with around 250 new store openings planned by 2020.
"Going forward, the focus of the management team will be to ensure that we deliver on the promises we made during the IPO. We look forward to making our new shareholders proud to stand behind and benefit from the continued success story that is Detsky Mir ."
Mikhail Shamolin, President and CEO of Sistema, said:
"We are pleased with the success of Detsky Mir's offering, and welcome the expanded family of shareholders to this uniquely attractive business.
"Over the last several years we have grown Detsky Mir into a major retailer, while consistently generating strong growth and returns on capital. Today, the Company begins a new chapter in its history with a highly successful IPO - the first in Russia in 2017 and the largest in EMEA year-to-date - that attracted a highly diversified book of domestic and international investors from Europe, the US and Asia.
"Sistema has maintained its controlling interest in Detsky Mir as we believe that significant further potential remains to be unlocked. The Company is well positioned to continue its growth by capitalising on its market leadership, robust infrastructure, iconic brand and high-growth e-commerce segment under one of the best management teams in the Russian market."
Kirill Dmitriev, CEO of the Russian Direct Investment Fund and Co-CEO of RCIF , said:
"The IPO of Detsky Mir represents a landmark transaction for the Russian market. The deal was made possible largely thanks to the hard work of the Company's shareholders, including the arrival of RCIF as a pre-IPO investor in the Company a year ago. Detsky Mir is an example of a fast-growing Russian company that delivers impressive results, and we expect its growth to accelerate alongside the resumption of growth in the Russian economy. Despite a difficult macroeconomic situation, Detsky Mir achieved EBITDA growth of more than 50% in the first nine months of 2016. The success of this deal confirms strong demand from international investors for public placements of top quality Russian companies. It has also opened the door for other Russian issuers looking at public markets."
Hu Bing, Co-CEO of RCIF , said:
"RCIF remains the largest minority shareholder of Detsky Mir, whose IPO was an important event for the Russian equity market and revealed high levels of interest among foreign investors in Russian assets. The investment in Detsky Mir is also an important success story for Chinese investors working in Russia and interested in investments in the country. We intend to implement further successful projects and investments in Russia."
ABOUT DETSKY MIR
GROUP HIGHLIGHTS
- Undisputed market leader in Russia in a large, growing and resilient consumer market segment
- Category-defining brand, highly popular customer proposition and longstanding presence in the market
- Highly diversified product selection that attracts customer traffic and supports growth and resilience of sales and profitability
- Rapidly growing e-commerce and omni-channel proposition underpin the Company's growth
- Asset-light cash-generative business model providing strong returns on capital and enabling consistent dividend payments
- Scalable supply chain and infrastructure platform
- Strong management team with track record of delivering business growth
Detsky Mir ("Children's World" in Russian) is the largest specialised children's goods retailer in Russia, with a diversified product portfolio comprising toys, products for newborns, fashion (apparel and footwear), large items and other products. It is the market leader both in terms of size of store network and in terms of revenue in the highly fragmented market for children's goods in Russia. According to Ipsos Comcon, in 2015, Detsky Mir had an estimated share of 32% (24% in 2014) of the specialised children's goods retail market in Russia and 13% (10% in 2014) of the total market for children's goods in Russia (including hyper- and supermarkets). This compares to 9% of the specialised children's goods retail market and 4% of the total market of children's goods for its largest competitor, also according to Ipsos Comcon.
The Group strongly benefits from the Detsky Mir brand, which dates back to the opening of the first Detsky Mir-branded store in central Moscow in 1947. Thereafter, all large children's stores or department stores in the Soviet Union selling children's goods were named "Detsky Mir", and the brand has been closely associated with the entire national children's goods retail industry. This superior brand recognition persists and is confirmed by the findings of a recent consumer survey by Ipsos Comcon, where 97% of respondents mentioned the brand when prompted.
As at 31 December 2016, Detsky Mir operated a network of 525 stores, comprising 468 stores in Russia and 12 stores in Kazakhstan operating under the Detsky Mir brand, and 45 ELC stores in Russia. ELC stores offer various educational and learning games and other toys for newborns and children up to 14 years old. Total selling space as at 31 December 2016 was approximately 596 thousand square metres. Headquartered and originated in Moscow, Detsky Mir has gradually expanded its footprint outside Moscow since 2003, and at present the network outside Moscow accounts for approximately 70% of the Group's revenue. Detsky Mir primarily seeks to operate in cities with populations in excess of 50,000 people. In Russia, the Company has a nationwide presence with stores located in 171 of the approximately 300 cities with more than 50,000 inhabitants, based on Rosstat population data as at 31 December 2016. Detsky Mir has stores in all of Russia's 20 largest cities and in seven cities in Kazakhstan.
In addition to retail stores, Detsky Mir offers its products through its www.detmir.ru and www.elc-russia.ru websites. In 2011, the Company launched its online store, which has experienced significant growth since then. The Company's management believe that Detsky Mir's superior brand recognition and customer loyalty are particularly important in capturing market share in the fast developing online segment of the market. In 2015, Detsky Mir completed the roll-out of its "in-store pickup" service for goods ordered online throughout its retail network in Russia. The Group is continuously improving its online proposition by expanding the online product range and further integrating the online and offline platforms. In the nine months ended 30 September 2016, Detsky Mir recorded over 63 million visits to its online store, and the number of orders placed via the online store was over 1 million.
Detsky Mir has adopted a dividend policy to pay at least 50% of annual net profit (calculated based on its full year IFRS accounts) in dividends, subject to the Group's need for financial resources for capital expenditures and its ability to meet its obligations as they fall due. The decision to pay a dividend must be approved by the Group's General Shareholders' Meeting following a recommendation by the Board of Directors.
Investor contacts
Alexey Voskoboinik Head of Investor Relations Office: +7-495-781-0808, ext. 2582 Mobile: +7-915-129-9905 AVoskoboinik@detmir.ru
Media contacts
Detsky Mir
Nadezhda Kiseleva Head of PR Office: +7-495-781-0808, ext. 2041 Mobile: +7-903-969-0086 nkiseleva@detmir.ru
EM
Denis Denisov +7-985-410-3544 denisov@em-comms.com
Tom Blackwell +7-919-102-9064 blackwell@em-comms.com
Peter Morley +44-7927-186645 morley@em-comms.com
Disclaimer
Some of the information in these materials may contain projections or other forward-looking statements regarding future events or the future financial performance of Detsky Mir. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "wiII", "could," "may" or "might" the negative of such terms or other similar expressions. Detsky Mir wishes to caution you that these statements are only predictions and that actual events or results may differ materially. Detsky Mir does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Detsky Mir, including, among others, general economic conditions, the competitive environment, risks associated with operating in the Russian Federation, rapid technological and market change in the industries Detsky Mir operates in, as well as many other risks specifically related to Detsky Mir and its operations.
