Russian fertilizer IPO is just the hint of things to come


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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 Sberbank ( SBRCY , quote ) 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 ( MOS , quote ) 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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks
Referenced Stocks: MOS , SBRCY

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