A separate source familiar with the deal said Alrosa was targeting a valuation of more than $10 billion. Alrosa declined to comment, though in May CEO Fyodor Andreev put the value at between $9 billion and $15 billion. The target valuation is between 38-44 roubles per share, said another banking source, and 40-47 roubles per share, according to a separate banking source. This would put the stake sale in a $1.4-1.8 billion range. Alrosa’s shares rose 6 percent to 38.5 roubles on Wednesday. “The asset is unique – at the moment Alrosa has no direct peers among public companies,” Barclays Capital analyst Vladimir Sergievsky said. De Beers, Alrosa’s most direct competitor, delisted in 2001 and is now 85 percent owned by Anglo. “Investors who buy Alrosa shares will get exposure to the consumer sector, which is unusual for mining companies. Demand should be good.” Analysts also point to a positive outlook for diamond prices in the longer term, with demand expected to outpace supply towards the end of this decade, as existing mines age with new deposits unlikely. The last major mine was discovered in 1997. The roadshow ahead of the sale is expected to start around Oct. 14, with the deal set to close by the end of the month. Goldman Sachs, JPMorgan, Morgan Stanley and VTB Capital are joint global coordinators and joint bookrunners for the offering. Renaissance Capital is a joint bookrunner.
UPDATE 4-Russia to cut stake in diamond miner Alrosa
In 2012, it was $10.9 billion. Forecasts for this year are better, at $11.4 billion, but falling to $11 billion next year and $9.7 billion in 2015. Falling net income constrains the capacity for Russian companies to fund investment projects which is one of the factors hurting demand for investments in Russia in the first place. Bad sentiment on Europe doesnt help. Last week, Prime Minister Dmitry Medvedev blamed much of Russias lackluster growth on the E.U., their chief trading partner. The European economy is teetering on the edge of recession, and has slowed growth in all BRICS countries. The U.S. economy cannot fully recover with high unemployment, and many individual Americans are just beginning to crawl out of debt, Medvedev wrote in the official address on the state of the economy on Friday, available on the Kremlins website if you can read Russian. During the G-20 meeting in St. Petersburg this month, Vladimir Putin even said the R word: recession is back on the table. Maybe not in Russia, but if Europe does worse than expected next year, it will surely hurt Russias plans.