If you are wishing you could have gotten a taste of Russian
fertilizer-maker PhosAgro last week in its initial offering in
London, fear not: there is more on the way. Global investors have
already been inundated with Russian (and Brazilian) IPOs this year,
which is reflected in both of those markets declines for 2011.
PhosAgro, which is Europe's biggest manufacturer of phosphate-based
fertilizers, has taken a relatively conservative approach to its
London-only offering as its bankers lower their estimates on what
the company may be worth. At the beginning, this deal was supposed
to value PhosAgro at something like $7.1 billion to $8.8 billion.
Now the company is targeting a more modest $5.2 billion, which
would make its shares price at $14, if they traded in the United
States. Demand for the stock at these levels has been decent,
ensuring that PhosAgro was able to pull about $500 million out of
the sale. Meanwhile, this sale will add to the $3.87 billion that
six Russian IPOs have already raised this year, not counting
another $3.88 billion from three secondary offerings.
State banking superpower
) will come up with a $7.6 billion secondary offering in September,
and U.S. traders will be able to get a taste of that. On the
fertilizer side, if PhosAgro gets a lot of buzz, look for its far
larger rival Mosaic (
) to move in sympathy:
While some have speculated that PhosAgro will use "all that money"
to launch a hostile takeover of MOS, we wouldn't bank on that. MOS
is a $32 billion behemoth, at least five times as large as PhosAgro
at its current valuation target. It would be more likely that the
M&A would go the other way, and since PhosAgro is only teasing
the markets here by floating a 10% to 15% stake, even that prospect
is vanishingly unlikely.