Russian Service Centres
|
07 March 2007 г. | 17:28
Russian service centres seek funds for expansion
Inprom will be the first of the majors to offer a public placement of shares (IPO) in the autumn, with an equal focus on Russian and West European investors. Between $60m and $90m is the fund-raising target, according to Inprom sources.
This month, Comtech, a Moscow-based company, is planning to issue credit-linked notes (CLN) for a total financing of $150m, according to the prospectus issued by Trust Investment Bank of Moscow.
Rouble bond issues of the equivalent of Rb 1bn ($39m) and Rb 1.5bn were issued in April and May by SPK of Yekaterinburg and Metallservice of Moscow, respectively. DiPOS, a Moscow region company, plans to issue Rb 2bn worth of debt this month.
Almost $400m is to be raised by the lead companies to finance their transition from trading and distribution into processing steel.
Industry and government reports indicate that the growth rate for finished steel production in Russia increased 6.5% in 2006 year-on-year to 58mt, of which 35mt was consumed domestically. Russian consumption of finished steel in 2006 grew 19.5% y-on-y, the third fastest rate of growth in the world after South Africa and Hong Kong. Domestic demand ate heavily into export tonnage.
Growth in coated flat products was fastest in the domestic market last year, with annual growth of 20.7%. Long products recorded growth of 9.2%, and HRC and CRC 6.4%. The figures indicate the extent to which Russian steel demand is independent of the oil and gas sector. Growth in steel pipes last year was 4.6%.
Roughly half the 35mt of finished steel bought by Russian customers last year was supplied direct by the top-10 steelmakers. Of the balance of steel deliveries, independent traders and steel service companies delivered almost 40%, or 13.4mt. The construction industry, especially for residential housing, has been growing since 2000 at almost 11% a year, and there is increasing demand for steel service centres to add value by expanding into activities such as welding meshes, cutting and bending of bars. The Russian car manufacturing marketing is also growing at a fast rate, with annual growth of 8.7% expected to the year 2014. The domestic white goods market is growing at about 20% per annum.
Inprom, Comtech, SPK, Metallservice and DiPOS are the leading independent steel distributors. There are differing estimates over how much tonnage each sells. SPK says it sold 1mt in 2006, compared to 930,000t for Metallservice, 860,000t for Comtech, and 710,000t for Inprom. Comtech reports that in 2006 its throughput was 938,000t, compared to 804,000t for SPK, and Inprom’s 402,000t. Inprom says its throughput last year was 706,000t. DiPOS claims its volume in 2006 was 830,000t. All five leaders are forecasting a doubling of their volumes within three to five years.
According to Comtech’s CLN prospectus, almost 60% of its throughput comprises long products; 15% HRC; 11% CRC; 8% pipes; and 6% coated flats. Total tonnage shipped in 2006 was 903,000t; this year Comtech is projecting shipments of 1.24mt. The target for 2010 is 1.6mt, of which 670,000t will be processed (42%). Capital spending to make this possible is estimated at $320m, of which half is to be raised from internally generated funds and half through debt financing. The CLN issue, to be sold on the market this month, will provide $150m in new debt.
Metallservice has issued Rb 1.5bn in bonds through local bank, Trans Credit. According to the prospectus, 40% is intended to refinance higher-cost debt; a third will be spent on acquiring additional warehouse sites and plant to expand the group’s regional network; and 27% is intended for working capital. Two UK registered concerns, Chemyline Invest Ltd. and Coaltrade Ltd., appear to hold a controlling stake in Metallservice of 32.2%.
Igor Konovalov, CEO of Inprom, told SteelWEEK that competition among the leading steel service companies is a good thing for steel consumers in Russia, and for the industry as a whole.
“These are positive moves as the market of sector securities is forming, and so is a group of well-informed and dedicated steel investors.
“You shouldn’t mistake the two different types of issues — placement for fixed income, and equity placement. They are attracting different investment interests of different investors. Since there is already investment interest in the industry, Inprom can count already on better-informed analysts,” said Konovalov.
Inprom’s free float is the first-ever IPO of a steel service company in Russia, he added.
Комментарии могут оставлять только зарегистрированные (авторизованные) пользователи сайта.